MinFin hopes to reach staff level agreement with IMF soon

Ukraine’s Finance Minister Serhiy Marchenko attended a
meeting with top IMF representatives in Washington last week, the ministry’s
July 9 press release stated. “The meetings enabled the two sides to reconcile
positions on anti-corruption reform, corporate governance reform and the
independence of the National Anti-Corruption Bureau of Ukraine,” the release
stated. Marchenko noted that Ukraine’s parliament had “quickly passed several
laws necessary for the continuation of the IMF Program”.  He also stated
that the economic situation in the country is improving, “but it is crucial to
be in the program of cooperation with the IMF to ensure macroeconomic
stability.”

The parties “agreed on close communication and joint
work to reach the Staff level agreement in the very near future,” the press
release stated.

Recall, IMF initiated an 1.5-year Stand-By program
with Ukraine in June 2020, with a total planned disbursement of SDR 3.6 bln
(USD 5.1 bln), of which Ukraine had received the initial tranche of SDR 1.5
bln. Since then, Ukraine has not been able to pass any program review.

Alexander Paraschiy: It is
indeed vital for Ukraine to reach a staff-level agreement for the first review
of the Stand-By program in the next few weeks in order to secure the next
tranche before September, otherwise there is a risk that the program will
terminate with no new tranches. While Ukraine’s law makers indeed voted for
some important laws agreed upon in the IMF program (including amendments to
banking and bank resolution laws), as wells as reinstatement a prison sentence
for officials’ failure to file e-declaration,  the key impediment for the
staff-level agreement seems to be the situation with election of the head of
Specialized Anti-Corruption Prosecutor’s Office and a commission that will
qualify members of the High Council of Justice. The chance that Ukraine will
stay in the program looks high, but much will depend on the government’s moves
in the next two weeks.