The International Monetary Fund says no date has been set for completing a review on a loan programme with Ukraine and discussions are continuing on outstanding issues, including central bank independence and a reformed judiciary.
The IMF and Ukraine agreed on a $5 billion standby programme last year and $2.1 billion was disbursed soon after, but the scheme has been on hold amid doubts on fundamental issues of state and legal practice. An extended mission ended in February without any agreement, with the Fund saying more progress was needed.
“There are a number of outstanding issues that need to be resolved,” Goesta Ljungman, IMF resident representative in Ukraine, told Interfax-Ukraine news agency in an interview.
“At this stage it is not possible to make any predictions about when the review can be completed. This depends on how quickly there is progress on outstanding issues.”
Ljungman said progress had already been achieved in reorienting monetary and exchange rate policies and cleaning up Ukraine’s banking sector, but ensuring central bank independence remained a critical issue.
“Preservation of these reforms and continued progress in strengthening the National Bank is a key part of the current Stand-By Arrangement with Ukraine,” he said.
And Ukrainians, he said, needed further confidence in their judicial system and that efforts to uproot corruption were bearing fruit.
“Ukraine’s economic development is being held back by a lack of trust in the judiciary and high levels of corruption,” he told Interfax. “The single most important thing to unleash Ukraine’s growth potential is to strengthen the rule of law and root out corruption.”
Ukrainian President Volodymyr Zelensky has pledged to press on with efforts to eliminate corruption and earlier this month dismissed the head of the Constitutional Court, accused by liberals of stifling anti-corruption efforts, including legislation aimed at getting officials to declare their income.
Ukraine, Ljungman said, also needed to “re-establish a fiscally sustainable position. This will require spending restraint and maintaining government revenue.” He said Ukraine had yet to establish “a fully functioning market for household gas,” a reference to the Fund’s criticism of government efforts to subsidise gas prices.
Ukraine “feeling the effects” – finance minister
Finance Minister Serhiy Marchenko, in a separate interview, made it clear that Ukraine was already feeling the effects of its failure to agree terms with the IMF, given external debt repayments of $6 billion this year.
“We are already feeling the discomfort. And that was already the case last year,” Marchenko told liga.net.
He said the anticipated Fund credits were already factored in the budget.
“We have no possibility of securing income from other source. The IMF programme is the baseline scenario.”
Ukrainian officials, Marchenko said, were in discussions with the IMF “three times a week. So they can fully understand in real time what progress we are making.”
Zelensky has acknowledged that his administration does not agree with all the positions adopted by the iMF and has contingencies for proceeding without an agreement. But his preference, he said, was to come to an agreement with the Fund.