IMF mission to arrive in Ukraine on May 21

An IMF mission will arrive in Ukraine on May 21 to review
the implementation of the current Stand-By program, Goesta Ljungman, the IMF
resident representative in Ukraine, told journalists at the Concorde Capital
Investment Conference 2019 held in Kyiv on May 16, as cited by
Interfax-Ukraine. The key outstanding issue for the review of the IMF’s program
is readopting a law on illicit enrichment, he said. Recall, Ukraine’s
constitutional court cancelled the law on punishing illicit enrichment in late February.
Commenting on the court’s ruling during the officials panel at the conference,
Ljungman said that the bill’s canceling “created a gap in the anti-corruption
toolkit that needs to be filled in a way consistent with international
standards.”

Ljungman also stated that the IMF does not see risk
for Ukraine’s cooperation from the government’s and Naftogaz’s decision to
reduce natural gas prices for households below the levels agreed upon last
year. “Import prices for gas have fallen … The government in this position
cannot insist on households paying above market prices for gas, and we agree
with that policy, as long as the market price for gas is below the controlled
price … But that doesn’t change the fact that by the end of the year we are
removing price controls and we are moving to market prices for household gas,”
Ljungman said.

Alexander Paraschiy: From
Ljungman’s comments, we can conclude that the IMF looks more or less satisfied
with Ukraine’s implementation of the agreed-upon measures under the Stand-By
program. Therefore, Ukraine has a high chance to get the next tranche (USD 1.25
bln, as earlier scheduled) in June-July, providing the parliament adopts a new
law on illegal enrichment and no new surprises emerge. This is broadly
consistent with our view expressed in our May 14 strategy report.