IMF delegation arrives in Ukraine for two-week review mission

An IMF delegation arrived in Ukraine on Nov. 11, local media reported. The mission will work in Kyiv until Nov. 25 to evaluate the country’s macro-financial situation and the progress of the implementation of its standby program. Previously, IMF Communications Department Director Gerry Rice stated that the Ukrainian government should expect the latest IMF tranche only in early 2015.

Alexander Paraschiy: This mission merely has a monitoring task and will not bring any results. It is critical for the IMF to see who is in the new Cabinet, how successfully the 2014 budget was implemented and what the 2015 spending plan looks like. All the IFIs are particularly concerned about how vulnerable Ukraine is with its gross reserves falling below USD 10 bln already in December.

At the same time, we do not expect these IFIs to rush to fund inefficient public spending in Ukraine. We anticipate the IMF will insist on strict implementation of its 2014 benchmarks (including keeping the budget deficit below UAH 64 bln) and substantial spending cuts in the 2015 budget. We believe the next tranche will be issued only after Ukraine’s authorities comply with requirements and show a commitment to continue painful changes. As Rice indicated, that will hardly happen before 2015.