IMF lists key demands for Ukraine to get next loan tranche

IMF spokesman Gerry Rice listed the key requirements
for the Ukrainian government to complete the fourth review of their USD 16.8
bln EFF loan program at a Sept. 14 press briefing. “Some of the major issues
are pension reform, the measures to speed up privatization, and concrete
results in the anti-corruption effort,” he said, adding that it is important
that “fiscal and energy sector policies remain consistent with program
commitments.” 

IMF First Deputy Managing Director David Lipton
visited Ukraine this week, meeting with Ukrainian President Poroshenko on Sept.
13 and giving an interview to the epravda.com.ua
news site. The date of the next IMF visit has not been agreed upon yet, Rice
said in Washington. Ukrainian officials had said earlier that a mission would
visit again in the second half of September.

Besides the requirement cited by Rice in his press briefing,
the IMF is also interested in the creation of a separate anti-corruption court
and the appointment of a new central bank head, the ukanews.com
news agency reported on Sept. 14, citing anonymous sources close to the
negotiations involving Lipton.

Alexander Paraschiy: When Rice
referred to “fiscal and energy sector policies being consistent with
commitments”, we believe that referred to Ukraine adopting a 2018 state budget
with a deficit that won’t exceed 2.4% of GDP, as well as the need for revising
natural gas prices for households based on the import parity principle as of
October.

Of his listed requirements, we expect Ukraine to
fulfill in the next two weeks parliamentary approval of the second reading of pension
reform legislation, which was adopted by parliament in first reading in July.
The key uncertainty is that more than 2,000 amendments have been added, which
could hinder its approval though key polticians have said that it won’t.

Regarding the privatization requirement, parliament
may amend legislation allowing the State Property Fund to hire experienced
M&A consultants who will conduct big privatizations. The fund will also
develop the conditions of the privatization tender of the Odesa Portside Plant.

A straightforward issue is the new central bank head,
which the president can find enough support for in parliament. As for the 2018
budget, MinFin has already prepared a 2018 draft budget with a 2.4% deficit.