IMF clarifies To Do list for next Ukraine loan tranche

20 June 2018

IMF Managing Director Christine Lagarde was “very encouraged” by Ukraine’s adoption of the law on June 7 creating the High Anti-Corruption Court (HACC), the fund said in a June 19 press release. In a call with Ukrainian President Petro Poroshenko on June 18, Lagarde commended him "for his leadership that enabled the approval of the law, and welcomed his intention to make the court operational by the end of this year,” the press release said.


The IMF’s release also included a list of future actions from Ukraine that the IMF wants in order to approve the next loan tranche. First, the parliament needs to adopt the law setting the technical conditions to establish the HACC (not addressed by the law adopted on June 7). Moreover, parliament needs to amend the June 7 bill “to restore the requirement that the HACC will adjudicate all cases under its jurisdiction,” the IMF wrote.


HACC is not designated to review appeals in corruption cases that are already being considered by Ukraine's regular courts, based on the adopted law, meaning that defendants in current corruption cases will be able to avoid the HACC when it’s established.


In addition to requirements related to HACC, Lagarde mentioned issues “related to gas prices and the budget that are critical to allow the completion of the pending review under Ukraine’s IMF-supported program."


Alexander Paraschiy: Lagarde has demonstrated that the IMF is well aware about all the details of HACC issue, so the Ukrainian government won't be able to delay the legislation changes. We expect both bills will be approved by June 21. The government has yet to give any clear signals on implementing the IMF’s other requirements, namely hiking residential natural gas prices and taking measures to ensure that this year’s budget deficit won’t go beyond plan. The IMF also hasn't mentioned progress on these issues.


We continue to view securing the next IMF loan tranche as the key precondition for Ukraine's financial stability for the next two years. Therefore, we continue to expect that Ukraine’s power brokers will make the efforts to secure the tranche by end-July.

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