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IMF Managing Director Kristalina Georgieva said Ukraine needs to reach a full mutual understanding on steps for further cooperation in the current reserve program.
The year 2020 is nearing the end, but the tranche of the IMF promised to Ukraine is still missing. The head of the NBU, Kirill Shevchenko, traveled to the United States to negotiate with the fund, and Volodymyr Zelenskyy spoke by phone with the head of the IMF, but there is no news about the receipt of the tranche.
Correspondent.net determined whether Ukraine should prepare to live without a tranche.
Unfulfilled plans
Initially, at the end of 2020, Ukraine was to receive two tranches of $ 700 million from the IMF.
Zelensky, during a conversation with the managing director of the IMF, Kristalina Georgieva, said that Ukraine did not stop in fulfilling its obligations under the stand-by program. Among other things, the reform of customs and tax services was approved, the Ministry of Finance and the National Bank are actively working to reduce the proportion of delinquent loans in the banking system.
“To date, all the structural milestones planned for the IMF program review have been completed,” Zelensky said.
But the IMF has a different opinion.
“A constructive telephone conversation with Ukrainian President Zelensky about the implementation of the IMF program, the independence of the central bank and efforts to combat corruption. The review of the program must be preceded by a complete step-by-step mutual understanding,” Georgieva said.
In other words, the IMF made it clear that it is concerned about the situation with the anti-corruption bodies, especially after the attack by the Constitutional Court on the electronic declaration, as well as the independence of the National Bank after the change of its leadership.
Receiving from Ukraine by the end of 2020 even the IMF tranche of $ 0.7 billion seems doubtful given the number of current unresolved issues under Ukraine’s program with the Fund, according to analysts at investment bank Morgan Stanley.
At the same time, there are still hopes that Ukraine will manage to get 0.7 billion, this tranche may be linked to the adoption of the state budget.
“Something went wrong. He asked for our money, but he got the answer” There is no money and it won’t be while I’m doing stupid things. Stay in a good mood. “Ours are back. No loud news, money and even signals for the loan market that they will give us one day. Meanwhile, in Ukraine: in 10 months, of the 216 billion needed, the authorities were able to attract only 90.” . 126 billion deficit to finance this year’s budget. Nobody makes external loans. Everyone expects high interest. And it is better Eurobonds immediately in foreign currency, rather than government bonds hryvnia. The situation goes from bad to critical. In 10 months, less than 90% of expenses were financed as scheduled. there are 95 billion that the government simply did not fulfill its promise and did not finance the expenses. And, be careful, who did they save the most: the Ministry of Health accidentally didn’t spend 24.5 billion in 10 months. And the Ministry of Defense did not finance 15.5 billion. “On his Facebook page, the people’s deputy Yaroslav Zheleznyak.
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According to Zheleznyak himself, the real economic problems of Ukraine without the money from the IMF will begin in September 2021.
“If we don’t get the tranche from the IMF, it will be a disaster. After all, the Fund tranche is not just money, it is also a signal to everyone else that it is possible to consistently invest in this country. If this signal is not received, given the need to settle debts, it will be a big problem for Ukraine. Here there will already be a real threat that this government will be demolished, there will be a kidnapping and so on. And also great political convulsions. And yes, this is all quite real, ”he said.
Zheleznyak added that if Ukraine does not make payments on the state debt, there will be a technical default.
But, according to economist Alexei Kushch, if the IMF tranche of 700 million is considered simply as a certain amount, then it is not critical.
“The gold and foreign exchange reserves of the National Bank are 27 billion, and the same $ 700 million can be covered by issuing government bonds,” he says.
But an IMF loan is also a signal to other lenders and investors.
“For our politicians, getting a loan becomes a kind of ritual action. They want to continue being a handshake in the West and have access to external capital markets, which may not be possible without the cooperation of the IMF,” Kushch said.
The factor of cooperation with the IMF is key to obtaining other loans, in particular from the EU – 1,200 million euros, the World Bank and EBRD – up to 1,000 million dollars.
