New IMF program requirements look realistic for Ukraine, media report

Ukraine has agreed to conditions of a new SBA program
with the IMF that are realistic in implementing, the ukranews.com news site
reported on May 24, citing its anonymous sources in the government. The
conditions of the program are yet to be published along with the memorandum,
which will become public after the first IMF tranche. But Ukranews said it
learned the key conditions for the next tranches apply to the areas of energy,
justice, fiscal, financial and antivirus, with no commitments in the painful direction
of land reform.

In the energy sphere, commitments include amendments
to Naftogaz’s (NAFTO) charter document to change what was done in March 2019
(when the cabinet granted itself the exclusive power to replace
the members of the management board) and the liberalization of the gas supply
market. In the justice sphere, the program foresees a change in the selection
procedure of High Council of Justice members (most likely, to grant more
authority to international organizations in vetoing judges selection). In the
fiscal sphere, there is planned the consolidation of the regional departments
of the tax and custom services into single national-level units. In the
financial sphere, the commitments will be to approve a plan of state banks’
work with NPLs and the approval of stricter requirements of bank operations
with related parties. On top of that, by spring 2021, the government will have
to convene an audit of state expenditures on combating the COVID-19 infection.

Alexander Paraschiy: Among these
reported IMF requirements, it seems that all the directions except the justice
sphere will be easy to implement. That provides a high chance that Ukraine will
be able to get more than one tranche under the new IMF stand by program.

What is more relevant at the moment is that the
updated schedule of IMF board meetings makes no mention of Ukraine by June 1,
which means little chance of a new SBA loan program in May. That means
multi-billion financial support for Ukraine (including the IMF tranche, E.U.
loans and World Bank guarantees, as well as other official financing) is
postponed for June, and gross reserves will have to fall in May.