Zelensky thinks Ukraine has implemented all IMF demands

Ukraine has implemented all IMF requirements ahead of
the nearest IMF loan tranche, President Zelensky told four television networks
during an interview on Oct. 22. “There are demands of the IMF. I think we have
implemented everything. This is my personal assessment,” Zelensky said. He
added that there are people inside and outside the country who are “working
against the interests of Ukraine” and who are “interested in the absence of
stability in Ukraine.” Zelensky also stated that Ukraine “won’t be able to live
without Western money.”

Zelensky’s position contrasts with the view expressed
by Alfred Kammer, the director of the IMF’s European department, who told a
press briefing on Oct. 21 that the fund is still “working closely” with Ukraine
“in terms of implementing and maintaining” the commitments and objectives of
the Ukrainian government.

Alexander Paraschiy: Formally,
Ukraine indeed has implemented all the structural benchmarks listed in the IMF
memorandum ahead of the IMF tranche for about USD 0.7 bln scheduled for
September. However, “commitments” and “objectives” under the memorandum, in the
IMF’s understanding, are not limited to the explicitly listed structural
benchmarks. Clearly, recent attempts to revert anti-corruption
reforms (including the unclear status of the NABU director
and the appointment of questionable personas to a selection commission for the
anti-corruption prosecutor) do not look compatible with Ukraine’s broad
commitments to the IMF. Neither are some signs of pressure on the National Bank’s independence,
as well as an excessive budget deficit for 2021. That said, we continue to
believe that probability for Ukraine to get the next IMF tranche this year is
low.

What is also remarkable is the difference in
interpretation of IMF-Ukraine cooperation between the parties. While IMF
members use terms such as “Ukraine’s commitments” and “objectives,” Zelensky
refers to the same things as “IMF demands.” In our view, this is a big cultural
gap confirming that the Zelensky administration indeed views the IMF and other
Western partners as a “cash mashine” that distributes payments in exchange for
some abstract “demands” that they don’t view as relevant to their approach to
governing.

It confirms the Zelensky administration neither understands
nor shares the values of its Western partners. As a result, those corrupt
parties that are threatened by the reforms have been able to influence the
administration in reversing them, using various forms of pressure and
incentives for corrupt individuals.

All this creates little trust in Ukraine’s
governing elites and nothing positive for Ukraine’s investment case.