IMF won’t insist on farmland reform for next Ukraine tranche, site says

IMF Managing Director Christine Lagarde agreed to
exclude farmland reform from its agenda with Ukraine, at the request of
Ukrainian President Petro Poroshenko, the agroportal.ua news site reported on
July 3, citing an anonymous source familiar with the negotiations in the U.S.
The source reported that the requirement of introducing free trade of farmland
will be excluded from the IMF memorandum.

Recall, the approval of legislation that allows the
free circulation of farmland by the end of May was among the structural benchmarks of Ukraine’s latest
memorandum with the IMF, i.e. among the preconditions for Ukraine to receive
the next IMF tranche.

Alexander
Paraschiy: If this development proves true, it significantly
raises the chance for Ukraine to get the next IMF tranche already this autumn,
which is very good for Ukraine’s sovereign risk. As we noticed in our June 21 comment, Poroshenko did not list
farmland reform as a priority in his press release after meeting with Lagarde
last month (while the IMF’s press release mentioned that reform). Ukraine is
among only a handful of countries in the world that doesn’t allow farmland
sales.

Launching the farmland market
is indeed not popular in Ukraine with 78% of citizens opposed, according to a
poll of the Reytynh polling firm released in mid-June. It is also being opposed
by Ukraine’s large farming holdings, which enjoy generous rents on farmland and
have strong representation in parliament. Therefore, even if this report
remains unproven, this reform is the least likely to be implemented among the
key IMF requirements. If the president does decide to press ahead, we see even
chances, despite the widespread opposition.