KYIV

The International Monetary Fund (IMF) is to dispatch another mission to Ukraine in September to assess progress on reforms, but is making no promises on resuming disbursement of funds from a year-old standby arrangement despite months of discussion on legislative changes and central bank independence.

The central bank and government officials had confidently predicted through the spring that a new tranche – Ukraine had requested $700 million – would be forthcoming in September.

President Volodymyr Zelensky stuck to bravado, but officials now grudgingly acknowledge there may be no new tranche until the end of the year. Some analysts wondered out loud whether the flow of credits would resume at all.

“Very constructive call with President Zelensky on Ukraine’s sound economic progress made under the IMF programme,” IMF Managing Director Kristalina Georgieva tweeted cryptically after speaking to the president by telephone. “Look forward to our productive engagement to advance our work on remaining issues during a mission in September.”

Speaking hours before the call, Zelensky exuded optimism.

“I believe that we have done everything. Everything that I promised Mrs Georgieva and everything needed in Ukraine – we have started all the main reforms,” he told a conference. “I believe we are ready to receive the tranche.”

Zelensky’s office said the conversation focused on strengthening banking governance and pursuing judicial reform, as well as proposed legislation on the central bank and the National Anti-corruption Bureau – one of several bodies committed to fighting graft. Agreements were reached, the office said, on intensifying the joint work.

NO CONFIDENCE IN UKRAINE

Commentators weren’t buying any of the optimism.

Analyst Serhiy Fursa, writing on the liga.net website, said the statements left unclear whether nagging issues of interference in corporate governance of state-run industries or manipulation of energy prices were still to be resolved.

“Does the coming of the mission mean we will get the tranche? No,” he wrote.

“Is there still a theoretical possibility that Ukraine will get money under the IMF programme? Theoretically, yes. But only theoretically…. Could the IMF agree to extend the programme to support Ukraine? Theoretically, yes. Is Ukraine ready to accept the tranche? Always. Is the IMF prepared to trust Ukraine? Unfortunately, no.”

Ukraine edged closer to meeting IMF demands last month when parliament overcame resistance from opponents of judicial reform and passed legislation on who is to sit on the 16-member High Qualification Commission of Judges, which selects and evaluates justices.

That body is appointed by the High Council of Justice — on a strictly competitive basis. A selection commission will examine candidates and will include three foreign experts with the right of veto on appointments.

Corporate governance issues surged to the forefront in discussions with Ukraine’s Western backers after the head of state oil and gas company Naftogaz was dismissed by cabinet order, bypassing the company’s own structures.

U.S. Secretary of State Antony Blinken referred directly to that incident when he told Zelensky and other officials during a visit to Kyiv that they faced the twin challenge of aggressive behaviour by Russia and “aggression from within, coming from corruption”.

The changes at Naftogaz were cited by analysts as a key factor holding up preparations for Zelensky’s visit to Washington – now set for 30th August.

The IMF’s 18-month, $5 billion standby arrangement expires in December. So far, Ukraine has received only one tranche, for $2.1 billion.

Separately, Ukraine is to receive from the IMF in coming weeks $2.9 billion, part of a worldwide distribution of new Standard Drawing Rights to member countries. In September, Ukraine faces $3 billion in debt repayments.

CHANGE AGAIN AT THE CENTRAL BANK?

Officials in recent months have said that Ukraine had met IMF demands on guaranteeing the independence of the central bank. But the Ekonomychna Pravda website said that a failure to clinch a resumption of IMF credits could be one of several reasons that might trigger the dismissal of the bank’s governor, Kyrylo Shevchenko, by the end of the year.

Shevchenko has been accused by analysts of failing to be a “team player” and almost a third of the central bank’s senior staff have resigned under his stewardship. He was appointed to the role by Zelensky, after his predecessor, Yakiv Smoliy, was forced out a year ago and cited “systematic political pressure”.

Commentator Alexander Paraschiy of Concorde Capital Research was blunt in saying that the “tangible achievement” of Zelensky speaking one-on-one with the IMF head still meant failure to meet the Fund’s demands and was unlikely to produce positive results.

“…It looks increasingly unlikely that Ukraine will be able to get any tranche under the ongoing SBA programme,” he wrote. “For Ukraine’s image in the West, this is not good news. However, for Ukraine’s public finances, this is not a big problem, as Ukraine counts on receiving about $2.9 billion in the form of SDR allocations in the coming months.”