IFIs criticize Ukraine for spending on banking crisis, voice support for current efforts

Three of the world’s largest IFIs criticized the
Ukrainian government for spending too many public funds to resolve its banking
crisis in a joint letter published on Jan. 17 on the finclub.net news site.
They called upon “all executive branches of government and law enforcement
bodies to carefully coordinate their efforts to reduce the cost of the banks’
bankruptcies to the maximum degree,” according to the letter signed by Ron van
Rooden of the IMF, Francis Malige of the EBRD and Satu Kahkonen of the World
Bank Group.

At the same time, they voiced support for efforts by
Ukraine’s central bank and Finance Ministry to minimize the costs of the
crisis, which have reached UAH 215 bln since 2014, of which UAH 155 bln was
spent on the Privatbank nationalization (or 7.5% of the 2017 GDP). Such efforts
are a key requirement of their loan programs, the letter said. Among their
recommendations was to continue to pursue the bail in of the bank’s creditors,
to pursue collections of outstanding loans, to pursue loan collaterals as
penalties and to prosecute the former shareholders of failed banks for damages
they inflicted.

Zenon Zawada: This letter was intended to muster international support for the
Ukrainian government in its attempt to make some order out of its collapsed
banking sector, particularly on the heels of the Jan. 16 release of the Kroll report that alleged fraud committed by Privatbank’s
former shareholders. It came as no surprise when Prosecutor General Yuriy
Lutsenko announced the possibility of a criminal case the same day as the
letter’s release. Ihor Kolomoyskiy and Gennadiy Bogolyubov have been in
conflict with Ukrainian President Poroshenko ever since he took office in 2014.
We have no doubt that the president would like to remove this oligarchic duo
from influence in Ukraine, which has already been accomplished to a large
extent. He can move closer towards completing that goal now that he has Western
backing.