With Ukraine’s new government in place, a team from the International Monetary Fund has arrived for talks on how to restart the country’s stalled loan program.
An International Monetary Fund team arrived in Kiev on Tuesday after the formation of a new Ukrainian government resolved a prolonged political crisis that had stalled the release of vital aid.
The mission’s visit was long awaited in the cash-strapped former Soviet country as it grapples with the costs of a two-year conflict in the pro-Russian separatist east and attempts to dig out of a dramatic economic swoon.
The Fund approved a new $17.5-billion (15.4-billion-euro) loan programme in March 2015 that included an initial lump payment of $5 billion and provided for the subsequent release of $1.7 billion every three months.
But Ukraine has so far only received $6.7 billion and seen no new disbursements since the second half of last year.
Anders Aslund explains what the Fund wants from the new government.
The Ukrainian parliament needs to pass a package of nineteen laws, involving public administration, deregulation, corporate governance, extending the list of state companies subject to privatization, and elements of judicial reform, to satisfy the IMF. Prime Minister Volodymyr Groisman has promised to have them adopted and seems to have secured parliamentary support.
The IMF greatly appreciates Ukraine’s energy reform. On May 1, the Ukrainian government finally unified both gas and electricity prices. After a quarter of a century, Ukraine’s influential gas traders can no longer buy the state through privileged arbitrage. No previous Ukrainian government policy has done so much to reduce corruption. Basically, this decision to unify prices should be sufficient for the IMF to offer the Ukrainian government a new tranche of $1.7 billion. Ukraine needs it badly to be able to start economic recovery.