Ukraine approves long-awaited anti-corruption court bill

Ukraine’s parliament voted on June 7 to approve the
final reading of a bill creating an independent High Anti-Corruption Court in
line with Western requirements. Drawing a supermajority of 315 MPs (out of 226
needed), the bill was a key condition for the IMF to provide its fifth loan
tranche, estimated at up to USD 2 mln, under its four-year EFF program with
Ukraine.

IMF spokesman Gerry Rice commented the same day that
the Fund has yet to study the document, stressing that key point is the process
of selection of judges to the court. “It’s important that the panel of
independent experts … has a crucial role in verifying that applicants to the
position of judge have the necessary qualifications,” he said.

At the same time, the Venice Commission of the Council
of Europe, which helped draft the law, welcomed the legislation’s approval.
“According to reports, the approved law meets the Venice Commission
recommendations,” said Commission President Gianni Buquicchio. He added,
“this is an important step forward for Ukraine and Europe, and above all
for the Ukrainian people, who suffered too long from the evil of
corruption.”

Recall, the IMF insisted on ensuring that a panel of
international experts have the final authority in vetoing unfit candidates for
the court’s judges. In the adopted law, a compromise was reached in which the
final authority will rest with a joint commission that consists of 16 Ukrainian
members and six international experts, who will nominate candidates with a
majority vote that must include three international experts.

Alexander Paraschiy: The law’s
adoption is a real breakthrough in Ukraine’s path to creating a full-cycle
independent anti-corruption system, involving the National Anti-Corruption
Bureau and Specialized Anti-Corruption Prosecutor’s Office. However, there
could be details in the bill that may prevent the creation of an efficient
anti-corruption system, and this is why the IMF is very cautious in its
comments on the legislation.

So far, we remain optimistic about the IMF staff
determining the legislation to be acceptable. We also expect that the other
remaining demands – a natural gas price hike and balanced budget – will be
resolved on Ukraine’s way to pass the next IMF staff review and get up to a USD
2 bln tranche thissummer. Needless to say, the IMF’s
approved tranche will significantly improve Ukraine’s sovereign debt
sustainability for the next two years, as well as provide backing for the
currency.