IMF further eases requirement for next Ukraine loan, media report

The International Monetary Fund has allegedly agreed to
relax among its key requirements that Ukraine will not have to create an
independent anti-corruption court, but instead will create anti-corruption
chambers in existing courts, the Ukrainian News agency reported on July 17,
citing anonymous sources in the Presidential Administration. Recall, relaxing
Western demands for an independent anti-corruption court was first expressed
last weekend by EU Commission
President Jean-Claude Juncker.

The same Ukrainian News report confirmed that the IMF
won’t insist on the farmland market launch as a precondition for the next loan
tranche. The compromise was reached in personal talks between the Ukrainian
president and IMF managing director, the report said.

Meanwhile, the IMF has yet to confirm any revision of
its conditions for Ukraine to secure its next loan tranche. Among these
structural benchmarks for 2Q17, listed in the April IMF memorandum, are: 1)
hiring an adviser to help Privatbank collect impaired loans (which has been
done); 2) adopting legislation on pension reform (approved in first reading
last week); 3) adopting legislation to create an agency to investigate financial
crimes (yet to be done); 4) adopting legislation to launch a farmland market; 5)
adopting legislation to create an independent anti-corruption court.

According to the memorandum, the next IMF loan tranche
under the USD 17.5 bln EFF program, in the amount of USD 1.9 bln, was scheduled
for 2Q17.

Alexander
Paraschiy: If confirmed, the loosened requirements for the next
IMF tranche raise the chances for its approval this autumn (most likely in
October). At the same time, it will likely to lead to a downward revision of
the amount of the loan to be disbursed, as was the case with the latest two IMF
tranches.  We expect the next IMF tranche
will be in the amount of USD 1.0 bln.

The postponement of the
hardest tasks on the IMF’s “To Do” list means each subsequent tranche
will require increasingly more efforts from the Ukrainian side, making the
likelihood of approval of further tranches increasingly unrealistic. That’s
especially the case with two critical elections – presidential and
parliamentary – slated for March and October 2019, respectively.