IMF mission to shorten its Ukraine visit, media report

The IMF mission that started its loan tranche review
in Kyiv on May 21 – and was expected to stay for two weeks – is going to
significantly shorten its stay, Ukrainian News reported on May 22. “Today or
tomorrow, the mission is coming back to Washington,” the news agency said,
citing a source close to the situation. The IMF is not going to review the SBA
program in the nearest time, the source said, primarily due to the dismissal of
Ukraine’s parliament by the newly elected president. Among other reasons, there
were “some appointments to presidential administration,” the source said.

Responding to the news, the IMF representative office
in Ukraine told the Interfax-Ukraine news agency that “the mission is
continuing its meetings with officials.”

According to the existing SBA program signed in late 2018,
Ukraine was scheduled to receive two loan tranches from the IMF in May and
November 2019, at USD 1.25 bln each.

Alexander Paraschiy:
Irrespective of the length of the current IMF mission’s stay in Ukraine, the
chances for a loan tranche this summer have evaporated after President
Zelenskiy called for the Cabinet to resign on May 20, before dismissing
parliament the next day. Ukraine does not urgently need the IMF tranche, so
these developments do not look worrying for Ukraine’s financial stability. However,
a fast resumption of talks with the IMF mission is vital as soon as the new
parliament (with its elections looking likely to be set for July 21) appoints a
new Cabinet in late summer.

We continue to believe that early parliamentary
elections (originally scheduled for late October) are a positive development
for Ukraine as they will diminish key political uncertainties sooner. From this
standpoint, the worst-case scenario for the near term is that the current MPs
will oppose or appeal in the courts parliament’s dismissal, which would lead to
the postponement of elections till late October, prolonging political
uncertainty for three months.