Ukraine to pursue 2018 EU MFA loan after missing tranche this year

The Ukrainian government will attempt to secure up to
EUR 1.8 bln in EU macro-financial assistance (MFA) in 2018, the
eurointegration.com.ua news site reported on Nov. 24, citing President Petro
Poroshenko. His statement comes as the Ukrainian government is unlikely to meet
the requirements of the third loan tranche of the current program. “We agreed
that next week, the European Commission will release a communique about a very
ambitious program of macro-financial support,” the president said. “Three
tranches, the same size as currently, starting in January 2018.”

Recall, EU Ambassador to Ukraine Hugh Mingarelli
warned that Ukraine stands to lose its chance to secure
the last EUR 0.6 bln wire from the EU under the current MFA program. He
mentioned that Ukraine still has to complete four requirements to get next
wire, including 1) ending a moratorium on timber exports, 2) launching
automatic reviews of e-asset and income declarations, 3) adopting a law
creating a credit register and 4) launching an electronic system that
identifies the beneficiary owners of companies.

The EU MFA program was launched in July 2015 at a
total amount of EUR 1.8 bln. The initial plan foresaw three loan tranches for
Ukraine, EUR 600 mln each, to be provided in 2Q15 (upon the program’s launch),
3Q15 and 1Q16. Ukraine was able to receive the second tranche only in 2Q17.

Alexander Paraschiy: It’s
positive for the Ukrainian government to have an opportunity to secure more
loans, but it has yet to demonstrate a consistent ability to make the most of
these opportunities. Moreover, it’s very likely the new program will contain
even more ambitious requirements. Accomplishing even one tranche will be enough
to be considered a success for the Ukrainian government, especially since
painful reforms are difficult on the eve of an election year.