Ukraine MinFin expects IMF tranche in July

Ukrainian Finance Minister Oleksandr Danyliuk said that he expects the IMF will provide a new tranche to Ukraine in July, the Ukrainian News agency reported on July 8. “We are finishing the negotiations. We are on schedule. As we planned for July, it will be so,” Danyliuk commented on the tranche’s timing. At the same time, Danyliuk acknowledged that Ukraine’s parliament has not approved some of the laws that are necessary to resume IMF cooperation. Danyliuk declined to estimate the size of expected loan tranche, Ukrainian News reported.

President Petro Poroshenko had a phone conversation on July 9 with IMF Managing Director Christine Lagarde, the Presidential Administration’s official website reported that day. The parties discussed providing the next tranche to Ukraine, the report said, while the president informed Lagarde on the course of Ukrainian reforms and the fight against corruption.

Recall, in May 2016, the IMF reported it may consider providing a new tranche to Ukraine in July. The size of new tranche may differ from the initially scheduled USD 1.7 bln and may amount to USD 1.0 bln, according to different sources.

Alexander Paraschiy: It seems like the future of new IMF tranche depends solely on the ability of Ukraine’s parliament (the Verkhovna Rada) to adopt a series of laws that are demanded by the Fund. Danyliuk’s expectation for the tranche arriving this month looks overly optimistic to us.

This week is the last session week of Ukraine’s parliament before it goes on vacation until the end of the summer. So the efficiency of Rada’s work this week will determine the timing of the latest IMF’s tranche. Yet even if all the necessary legislation is approved, the chance for Ukraine to get new money from the IMF in July is insignificant, in our view.

As of today, the IMF’s board schedule through July 20 does not contain any questions on Ukraine in its agenda. So in the best case scenario, the board will consider the Ukrainian question in late July and the tranche can be disbursed in early August only.

In the worst case, the Rada will fail to approve the necessary laws this week and will refuse to put off its vacation. Given the Rada’s lack of efficiency demonstrated last week, such a scenario looks very probable. In which case, the IMF tranche will arrive no earlier than September.