IMF arrives in Kyiv to review loan progress

An IMF mission has begun its work in Ukraine for its first review of the Extended Fund Facility (EFF), the National Bank of Ukraine (NBU) reported on May 13 on its Facebook page. The mission will assess the progress of the implementation of the loan program, which was secured at the end of March with the first USD 4.9 bln tranche. The mission will work in Kyiv during the next two-three weeks. According to the program’s memorandum, the IMF should complete in May the first review of the end-March performance criteria. If the progress is recognized as satisfactory, Ukraine will receive a second USD 1.67 bln tranche by June 15.

Alexander Paraschiy: Among the key goals set for the first quarter is completing the debt operation, the creation of well-functioning National Anticorruption Bureau, an increase in residential utility rates, and strengthened payment discipline in the energy sector. In essence, Ukraine has fulfilled most of the requirements except the debt operation. It’s these tough negotiations with creditors that’s of most concern for the IMF in reaching its decision. The IMF memorandum does not state clearly that restructured debts are a precondition for further funding. With the debt operation, the IMF wants Ukraine’s fiscal accounts statistics to be improved. The Fund perfectly understands that the debt operation is a two-way process and Ukraine can do little if creditors simply do not want to share costs. Against this backdrop, Jaresko has to show that she’s “doing her best” to avoid being blamed for not using all the available tools. All in all, we expect the results of the first review will be positive.