Ukraine plans to agree with IMF on new loan this month, media report

The Ukrainian government is intending reach an
agreement on a new loan with the IMF this month, the ukranews.com news site reported
on Oct. 10, citing its anonymous sources. “Ideally, it should be done by Oct.
18, but we hardly have enough time,” the news agency said, citing its sources
familiar with the talks. This deadline was prompted by the Cabinet’s decision to postpone
the IMF-required adjustment of natural gas prices for households until Oct. 18.
Most likely, the government will have to postpone the gas price hike until the
end of October, the ukranews.com news site concluded.

Besides the outstanding issues of gas pricing and
parliamentary approval of a balanced 2019 state budget, there are also some
anti-corruption issues, the news agency reported. In particular, the IMF wants
to see the progress in Ukraine’s establishment of a fully functioning High
Anti-Corruption Court, as well as initiate an objective study of the work of
Specialized Anti-Corruption Head Prosecutor Nazar Kholodnytskiy.

An IMF deal would result in the initiation of a new
Stand-By Arrangement, instead of the Extended Funds Facility (EFF) program that
was launched in March 2015. Out of USD 17.5 bln under the EFF program, which
was initially planned to be disbursed in 16 quarterly tranches till March 2019,
Ukraine was able to receive only four tranches for USD 8.6 bln.

Alexander Paraschiy: It still looks possible that Ukraine will resolve all the IMF-required
conditions (including approval of the 2019 state budget) by October 18, but most
likely, Ukraine will push back the deadline to end-October to resolve all the
remaining issues. In any case, it is highly likely Ukraine will see a positive
decision from the IMF board on a new loan tranche in November, considering how
critical a role it will play in Ukraine’s economy in getting through the
tumultuous period of 2019.