IMF mission arrives in Ukraine

An IMF mission led by Ron Van Rooden arrives in Ukraine on Nov. 12 to begin discussions with Ukrainian authorities on its economic reforms program, the Ukrainian News agency reported. The last IMF mission visited between Sept. 22 to Oct. 2 as part of its second review of the third tranche of its four-year, USD 17.5 bln loan. However, discussions were set to continue since the IMF did not have a clear vision on the government’s planned tax reform and 2016 budget. Then on Nov. 4, Deputy Finance Minister Ihor Umanskiy said IMF talks will continue only after the tax reform project and 2016 budget are developed and ready for the Fund’s review.

Alexander Paraschiy: The arrival of the IMF mission indicates the Finance Ministry has established some vision of the 2016 budget that takes into account MinFin’s tax reform proposals. Most likely, the IMF mission will concentrate on speaking with the supporters of the alternative tax reform, persuading them that the government can’t afford a radical tax cut.

We expect serous talks since the alternative tax reform has positive moments such as reforming the tax administration, which is strongly advocated by local business. What’s more, we expect the Finance Ministry to advocate parliament’s approval of the tax reform and 2016 budget in one package on Christmas Eve, putting some much-needed pressure on MPs.  In light of all this, we expect the next wire from the IMF will arrive only in early 2016. Thus, we continue to expect Ukraine’s gross international reserves finishing close to USD 13 bln by the year end.