IMF to demand from Ukraine land and pension reform, leaked draft says
17 January 2017
A draft of a Ukraine’s latest memorandum with the IMF, which is planned to be signed in the coming weeks, was leaked by the epravda.com.ua news site on Jan. 16. Ukraine is going to take stronger commitments to the IMF for 1H17, reflected in seven new structural benchmarks, the document said.
They include preliminary approval of legislation creating a land market and terminating a moratorium on agricultural land sales by end-1Q17. In the previous memorandum signed in September, only drafting a bill on the land market was required, which has not been done. Since then, Ukraine’s parliament approved legislation extending the moratorium on a land market until 2018.
Another critical issue for the IMF is approval of pension legislation by end-1Q17 that will gradually increase the pension age and the years of work needed to qualify. Other structural benchmarks are about social assistance, including adopting rules to monetize utility subsidies and establishing a centralized database of recipients of social assistance. Also, the IMF requires approving legislation for establishing anti-corruption courts by end-1Q17.
Two structural benchmarks have been set for the recently nationalized Privatbank, including hiring a forensic auditor to investigate misdeeds, as well as hiring auditors to verify loans to the bank’s former related parties. Also the text indicates that Ukraine is planning (but not committing) to recover most of the loans that the bank provided to related parties, or otherwise “request the Prosecutor General to initiate collection enforcement of the loans.”
Alexander Paraschiy: We expect that most of the mentioned conditions will remain in the memorandum’s final version. The mere existence of this draft indicates that the memorandum could be signed and the next tranche could arrive in the coming weeks, as the IMF spokesman indicated last week.
On the negative side, the To Do list for 1H17 looks rather tough, which makes prospects of a new IMF tranche uncertain. The tasks do not look impossible, but will require strong political will and much more time to implement in Ukraine’s realities.
