IMF, Ukraine yet to agree on law preventing Privatbank denationalization

The IMF mission to Ukraine, which visited Kyiv last
week, was not able to finalize with the government the prior actions to start a
new IMF loan program for about USD 5.5 bln, local media reported. Among the key
issues that were discussed is a law that prevents the return of failed banks,
including Privatbank (PRBANK), to its former shareholders, as reported by the
nv.ua and epravda.com.ua news sites. The initial version of this bill, number 2711 drafted in December
and nicknamed the “anti-Kolomoisky bill”, stipulates that any bank that is
recognized as insolvent cannot be returned to its former shareholders. The bill
also foresees that such bank’s shareholders could count on some compensation if
the bank is illegally recognized insolvent, though it puts strict limits on the
amount and procedure of such compensation. Danylo Hetmantsev, the head of the
parliamentary financial committee, sees this law as breaching the constitution.
He offered an alternative bill that sets much lower limits on possible
compensation, nv.ua reported. So far, the government has not been able to agree
on any alternative bill with the IMF, so the work is ongoing, media reported.

Alexander Paraschiy: Most likely,
the Ukrainian parliament will remain occupied with its review of about 2,000
remaining amendments to a bill on farmland reform throughout the March
sessions. Any other legislation is likely to be considered by the Rada only in
April. Therefore, Ukrainian authorities and the IMF have about a month to reach
a compromise on the text of a new “anti-Kolomoisky bill”.

Worsening global market sentiment, amid the
government’s tough international debt repayment schedule, may force the
authorities to reach a compromise with the IMF. For that reason, we remain
optimistic about an IMF deal in 2Q20, or 3Q20 the latest.