IMF board reportedly schedules Ukraine tranche meeting for April 3

The IMF Executive Board plans to meet on April 3 for its third review of the fourth loan tranche of its USD 17.5 bln Extended Fund Facility program for Ukraine, reported on March 30 the Ukrainian News agency, citing Jerome Vacher, the IMF resident representative in Kyiv. Finance Minister Oleksandr Danylyuk also confirmed this info on his Facebook page. The completion of the third review will enable the disbursement of a fourth tranche worth USD 1 bln.

Recall, the IMF board meeting on this issue was initially scheduled for March 20, but was unexpectedly canceled and postponed on its eve. The meeting was postponed to allow staff time to assess the implications of recent developments in Ukraine on the program, Vacher told Bloomberg News on March 19.

Alexander Paraschiy: While we suspected various factors for the delay, the news of the April 3 meeting shows the IMF was chiefly interested in seeing the calculations of the macroeconomic impact of the government’s trade blockade on occupied Donbas (officially imposed on March 16). Since the government has estimated the impact to be far from being dramatic the Fund looks like it’s ready to approve the tranche.

It’s also important that the IMF has scheduled the meeting despite yesterday’s London court ruling rejecting all of Ukraine’s arguments in its USD 3 bln debt dispute with Russia. We view that as a sign that the IMF does not see any economic fallout for Ukraine from that ruling.

If the executive board decision is positive, the USD 1.0 bln wire should arrive promptly in early April.

For further tranches, we believe a launch of Ukraine’s agricultural land market will be needed. The Agrarian Ministry has already been actively working on such legislation, which calls for the market to be launched over a three-year period, with state-owned land circulating first. The ministry expects the draft to be submitted to parliament by June.