The mission was impossible again. The IMF mission left Ukraine without reaching agreement on a new financial program. And this is an extraordinary event.
Twice in a row the IMF representatives fly to Ukraine and twice in a row they cannot reach an agreement. And that is scary. Because if for the second time in a row the Ukrainian authorities cannot convince the IMF mission of their devotion to reform, then this means that a third flight might happen.
And that means market confidence can be shaky. That confidence, which made the hryvnia so strong this year. That confidence, which is based on the belief that common sense will always win and the Ukrainian authorities understand how crucial cooperation with the IMF is.
Ukrainian power is consolidated as never before. There is a president, prime minister and mono-majority. All this is one team. So, they cannot say that there are no political opportunities. They are. Something else is missing.
What again hindered cooperation? Or rather, who? A name that cannot be called. With the surname Kolomoisky. The IMF mission left Ukraine last time with a simple message: the Ukrainian authorities must prove that key red lines will not be crossed. These are arrangements with Kolomoisky and the independence of the Central Bank. Ukrainian authorities have not proven this.
Frankly speaking, it’s the Ukrainian president, as a person with full power, who did not prove. Moreover, when the IMF mission returned, Kolomoisky staged a demonstration of strength: both verbally (through interviews, threatening to take his bank back both by force and controlled court decisions), and actions.
The reasons are the protests during the negotiations, and the actions of Ukrainian security officials regarding the independent National Bank. And all this was allowed by the president.
As a result, the mission leaves. As a result, the Moody’s rating agency does not raise the rating of Ukraine, as everyone expected, leaving it at a very low level. And this is the result of the failure of negotiations. As a result, markets received a signal. There will be no IMF program this year.
The IMF program is at stake. And the markets see that Zelensky is not ready for a conflict with Kolomoisky, even when Ukraine’s macroeconomic stability is threatened.
The economy of our country is growing now. Strong hryvnia as a result of an influx of investments, including in Ukrainian government bonds. The cost of Ukrainian debt is reduced. The picture looks positive. But all this is based on investor confidence that Ukraine is in cooperation with the IMF.
Therefore, Ukraine is trusted and given money. Take away the IMF brick - and the whole structure will collapse. And since March, Ukraine has to repay large external debts. With the IMF program, it will not be difficult to enter the markets, attract the necessary resources and refinance debt. Without the IMF program, it will be necessary to go to Maidan. True, as practice shows, Ukrainians are more likely to burn tires there.
Zelensky must make a decision. What is more important for him: the peace with Kolomoisky or the economic future of Ukraine? What is more important: TV support for its rating or support of the Ukrainian economy by our western partners? And sooner or later he will have to make a decision.
And it is obvious. And it’s much easier to accept it now, when the positions are strong, the rating and hryvnia are high. IMF is ready for cooperation. But it’s not ready to support the country in which the oligarch rules. And while the president allows him to rule, the missions will remain impossible.