IMF forsees no changes in funding program to Ukraine, so far
5 February 2016
The IMF’s Managing Director Christine Lagarde said that the Fund isn’t going to change its funding program in Ukraine, even though she considers the resignation of the pro-reform Ukrainian Economy minister, Aivaras Avromavicius, to be “of concern”, Reuters reported on Feb. 4. “If the allegations that he makes in his resignation are correct, then it’s obviously an indication that the anti-corruption measures … are not yet working,” Lagarde said. She added that such measures need to be implemented, as Ukrainian authorities “are accountable not only to the Ukrainian people, but also to the international community”. When he announced his resignation, Avromavicius accused the President’s friend Ihor Kononenko of corruption.
Ukraine is counting heavily on intentional financial support led by the IMF in 2016. In particular, the government is planning to receive up to USD 10 bln in bilateral and multilateral loans this year, including USD 5.8 bln from the IMF. Ukrainian government expects the IMF to make a positive decision on a USD 1.7 bln tranche in February.
Alexander Paraschiy: Lagarde’s statement yesterday should ease concerns that the West won’t give Ukraine financial aid due to the recent corruption scandal. In fact, it looks like chances are high that Ukraine will receive the next IMF tranche of USD 1.7 bln soon.
However, this does not mean that all the other tranches of the IMF and other donors are secured for 2016. At a Ukrainian Cabinet meeting on Feb. 4, Finance Minister Natalie Jaresko said that she needs “the parliament’s unconditional support for the reforms program and the program of cooperation with the IMF,” thus hinting that the parliament is not providing this support. With the increasing unwillingness of the parliament to approve the changes required by the IMF, there is a high risk that the next tranches from the Fund will be delayed again. At least, that means Ukraine will receive much less than USD 10 bln in financial aid from the West this year.
