EU to release next Ukraine loan after IMF tranche, Poroshenko says

Ukrainian President Petro Poroshenko said in Brussels on June 27 that the EU has agreed to provide Ukraine with its next EUR 600 mln wire after the IMF approves its loan tranche, as reported by Radio Free Europe/Radio Liberty (RFE/RL). The EU loan will be issued alongside promised U.S. loan guarantees, he said.

Recall, the EU and Ukrainian government signed a memorandum of understanding in May 2015 for a Macro-Financial Assistance (MFA) Loan Agreement worth EUR 1.8 bln, consisting of three wires at EUR 600 mln each. Ukraine received the first wire in July 2015, after which new transfers were frozen along with IMF funding owing to stalled reforms.

Alexander Paraschiy: The EU has repeatedly affirmed that its loan program’s renewal will be based on the real implementation of reforms, which will be assessed by the IMF. Yet the situation with next IMF wire remains uncertain. Though we do not see many impediments to a positive decision from the IMF Executive Board (all the painful steps have already been taken), Ukraine has yet to approve at least 19 legislative items required by the IMF.

As of today, the likelihood of approving the bills in the near term is quite poor. We counted only three laws fully approved, and two approved only in the first reading. All the other bills are being drafted or have yet to pass parliamentary committees. Parliament needs to approve the legislation during the next two weeks before the summer break, otherwise funding from the IMF and EU will be delayed until at least September. Fortunately, the draft laws are mostly about technical changes and should not encounter political resistance.