IMF says Ukraine has outstanding issues for tranche

IMF spokesman Gerry Rice confirmed on June 16 the Fund may consider providing the third tranche to Ukraine under its EFF program in July, but only “following the implementation of actions to entrench fiscal and financial stability.” At his briefing, Rice reiterated the IMF’s position that “much is being achieved” by Ukraine in terms of macroeconomic stabilization, though “much of the work still lies ahead” in the areas of improving investment climate. Among the key outstanding issues, Rice listed steps to tackle corruption and reform state-owned enterprises. He said the discussions on these steps are still continuing with the Ukrainian side, including Finance Minister Oleksandr Danylyuk, who visited the IMF on June 15.  

Alexander Paraschiy: It’s not encouraging to hear that outstanding issues still remain for Ukraine, an entire month after the IMF’s last staff visit. We are hearing again the need to reform state-owned enterprise, an area in which Ukraine has reached little progress, in our view. We maintain our position that the IMF tranche looks more likely to arrive in August than in July.

The encouraging takeaway is that the IMF is keeping mum on Ukraine’s revised position on its USD 3 bln debt to Russia. Recall, Ukraine officially stated in late May it’s refusing to repay it, which raised the risk that Ukraine won’t qualify for the IMF’s lending into arrears policy.