Ukraine still far from reaching IMF review, media report

The ongoing IMF mission aimed at completing the first
review under the current stand-by arrangement (SBA) still has lot of concerns
about Ukraine’s commitments to the fund, the lb.ua news site reported on Jan.
22 referring to its anonymous sources in the government. Among the IMF’s key
concerns are the recently introduced cap on natural gas prices,
legislation on punishment for fraudulent e-declarations
by state officials, and issues related to the Constitutional Court.
On top of that, the IMF might demand amending power of the council of the
National Bank, as well as require that the National Bank be forbidden from
purchasing government bonds on the secondary market.

In light of this, the lb.ua concluded Ukraine’s
chances are low to receive next IMF tranche in 1Q21. Meanwhile, Ukraine is
seeking to extend the approved program to 24 months from earlier agreed upon 18
months.

Recall, the IMF’s SBA program, approved in June 2020,
foresaw the provision of SDR 3.6 bln (USD 5.2 bln) of loans to Ukraine’s budget
in five tranches over 18 months. Thus far, Ukraine only have received an
initial tranche under the program.

Alexander Paraschiy: The alleged list of IMF concerns is excessive, in our view. What’s
certain is the fund will demand the full restoration of the recently damaged
anti-corruption infrastructure. Therefore, the lb.ua allegations are in line
with our assessment that the probability of Ukraine of securing next IMF
tranche in 1Q21 is below 50%. A likely delay of the next tranche is not a big
risk for Ukraine’s public finances as soon as there is still a high chance for
renewed cooperation with the IMF in 1H21.