IMF board may decide on next Ukraine tranche within weeks
13 January 2017
The IMF has not yet scheduled a board meeting to approve the third review of its USD 17.5 bln loan program with Ukraine, but such a meeting should occur within weeks, Communications Director Gerry Rice told a press briefing on Jan. 12.
“Assuming all remaining issues are resolved soon, we expect to propose the completion of the review to our executive board in the coming weeks,” he said. Among the remaining issues, he listed “locking the gains made in energy sector reforms” and finalizing the memorandum of understanding “on policies regarding the timing of upcoming measures.”
Among the key milestones that have been made by Ukraine in order to complete the third review, Rice mentioned the adoption of Ukraine’s 2017 budget, which is “consistent with program targets,” the filing of asset declarations by high-level officials and “decisive actions to safeguard financial stability.”
Recall, based on memorandum singed in September, the IMF scheduled to complete the third review under the EFF program with Ukraine in November, which should have resulted in the provision of a fourth tranche of about USD 1.3 bln. Two structural benchmarks to complete the third review were drafting a bill on creating an agricultural land market and utility-related public assistance program adjustment that “ensures that benefits remain within the allocated fiscal envelope.”
In late November, the IMF mission to Ukraine didn’t offer positive results. No progress on the two bechmarks is visible as of today.
Thus far, Ukraine has received USD 7.5 bln in three tranches under the USD 17.5 bln EFF program, including two for USD 6.5 bln in 2015 and one loan for USD 1.0 bln in 2016.
Alexander Paraschiy: Of the two key structural benchmarks to complete the third review, Rice only mentioned one in his remarks yesterday – with regards to energy/utility assistance. The evaluation of this task is very subjective and the IMF may decide to be flexible.
Ultimately, we expect the IMF will finalize the loan memorandum in the coming weeks – in line with what Rice said – and Ukraine will receive the fourth tranche of about USD 1.3 bln in early February. Meanwhile, the prospects of receiving the next scheduled tranche of about USD 2 bln (initially scheduled for February) are not clear at the moment.
