Now less loyal: IMF to abandon its "political" tranches to Kyiv

Author : Yaroslav Konoshchuk

Source :

Ukraine can no longer rely on the next tranche of the IMF loan in 2017. Back in October it was officially recognized by the NBU. And in November, Finance Minister Olexander Danyliuk announced that he expects to receive the next tranche only in January 2018, noting that "there are some problems with the Fund". In December, acting chairman of the NBU board Yakiv Smoliy noted that the tranche is expected in the second half of 2018. Earlier NBU expected to receive an additional 3-3.5 billion dollars from the international lender. figured out why the long-term chief creditor of Ukraine suspended the allocation of tranches and what the consequences could wait for us in such a situation
22:53, 20 December 2017

Desired billions

We recall that in January 2017, the then head of the NBU Valeriya Hontareva said that she expects to receive four tranches from the IMF in 2017 as part of the extended loan program and two tranches of macro-financial assistance from the EU. And the first tranche, according to the version of the head of the National Bank, was to enter the regulator's accounts as early as February 2017.

"We hope that at the beginning of next year we will see a meeting of directors, and the tranche will arrive to us early next year - in January-February," Hontareva said at a press conference in Kyiv in December 2016.

In fact, as you know, the only tranche of the IMF loan in the amount of $ 1 billion (originally planned $ 1.5 billion - Ed.) went to the accounts of the National Bank in April. Since then, despite Hontareva's statements about the possibility of renewal of cooperation with the Fund, the Bank did not receive a penny.

The reason for the suspension of cooperation in Washington was called the absence of land and pension reforms, as well as the renunciation of the IMF's obligations to raise gas prices for the population, although the Cabinet adopted a draft resolution to implement the memorandum with the IMF, which suggested raising gas prices for the population to the level of imported parity. Unofficially, the reason was also called the lack of progress in the issue of repaying loans of PrivatBank.

"The government does not intend to raise gas prices for the population," Prime Minister Volodymyr Groysman repeated. However, it is not a secret that Ukraine after the Maidan received tranches from the IMF, fulfilling not all obligations, and therefore tranches were unofficially called political. It seemed, this time it will be the same. Thus, in particular, the authorities succeeded in persuading the IMF to postpone the adoption of the land reform by the parliament, which, among other things, envisaged the lifting of the official moratorium on the sale of agricultural land, as well as waiting for privatization.

However, in late October, head of the NBU Yakiv Smoly during a press conference said that the main bank of the country does not expect another tranche from the IMF before the end of 2017, and experts of the National Bank in the report on the economic situation in Ukraine said about the need for a new program of cooperation with the Fund.

Political tranches of the IMF

Why does the IMF temporarily abandon the practice of "political tranches"? Sources of in the coalition factions name several reasons for such actions. As the interlocutors note, among other things, this is a reaction to the war between the Prosecutor General's Office and the National Anti-Corruption Bureau, "whose ultimate goal, on the part of the Presidential Administration, was to discredit the bureau and, at the very least, significantly reduce the independence of this structure." The interlocutors called the Minister of Internal Affairs Arsen Avakov the initiator of the plan for an "attack on the NABU".

It is worth recalling that after the bill which provides possibility of dismissing the director of the NABU without conducting an audit was registered in the parliament, Poroshenko was called directly by IMF head Christin Lagarde who stressed the need to "preserve the independence of the National Anti-Corruption Bureau and the Specialized Anti-Corruption Prosecutor's Office."

“On the night before the vote for the bill, on Thursday, Arseniy Yatsenyuk and several other prominent representatives of his political party were summoned to the US embassy which demanded to refrain from voting for the bill (on changing the dismissal procedure for the director of the NABU, Ed. )", sources in the coalition factions told. They also add that the embassy was extremely unhappy with the level of corruption. However, in the "People's Front" party they say that they themselves were the initiators of the meeting.


Related: Ukraine’s Security Service caught Russian spy in secretariat of Ukrainian government

In addition, Americans were dissatisfied with the lack of transparency in the election of the head of the State Bureau of Investigation and the renovation of the judicial vertical. According to sources in the presidential administration, the G-7 ambassadors expressed this to the president of Ukraine Petro Poroshenko.

"Poroshenko assured that the new head of the State Bureau will work transparently and the ambassadors have no cause for concern," our interlocutors note.

However, this story it is not a question of a full stop of cooperation.

"The IMF will now be less loyal assessing the fulfillment of the obligations mentioned in the memorandum with the authorities, which means it will be at least much more difficult to postpone the implementation of socially unpopular norms ... For now, they are waiting for how the authorities will live without credits," sources in the coalition factions said.

The authorities, in turn, do not mind continuing cooperation with the Fund, but already within the framework of the new program, although they do not refuse to implement the current program. According to sources in the Presidential Administration, on Thursday it is planned to consider and vote for the bill on the anti-corruption court.

Earlier, Prime Minister Volodymyr Groysman announced the need to sign a new program with the Fund.

"Perhaps we will need a new IMF program after the end of the current one," the head of government said in the summer. Now the analysts of the NBU also announced the need for a new program.

As explained sources in the Cabinet of Ministers, the first tranche under the new program of cooperation, according to unwritten rules, "is issued on parole of honor."

And although, according to the sources in the Presidential Administration, they were thinking about abandoning international loans, taking into account the adopted draft budget-2018 (in particular, wishes and payments for debts), but Ukraine so far depends on borrowings, including external, so the authorities will have to compromise with the IMF or negotiate with holders of Eurobonds.

Related: Russian Tatneft oil firm ran Crimea fuel station, ignoring sanctions risk

Related: Poroshenko: Ukrainian military presence to increase in Donbas

Система Orphus

If you find an error, highlight the desired text and press Ctrl + Enter, to tell about it

see more