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Concorde Capital Research: New IMF program requirements look realistic for Ukraine, media report

May 25, 2020 | Cbonds

Ukraine has agreed to conditions of a new SBA program with the IMF that are realistic in implementing, the news site reported on May 24, citing its anonymous sources in the government. The conditions of the program are yet to be published along with the memorandum, which will become public after the first IMF tranche. But Ukranews said it learned the key conditions for the next tranches apply to the areas of energy, justice, fiscal, financial and antivirus, with no commitments in the painful direction of land reform.

In the energy sphere, commitments include amendments to Naftogaz's (NAFTO) charter document to change what was done in March 2019 (when the cabinet granted itself the exclusive power to replace the members of the management board) and the liberalization of the gas supply market. In the justice sphere, the program foresees a change in the selection procedure of High Council of Justice members (most likely, to grant more authority to international organizations in vetoing judges selection). In the fiscal sphere, there is planned the consolidation of the regional departments of the tax and custom services into single national-level units. In the financial sphere, the commitments will be to approve a plan of state banks’ work with NPLs and the approval of stricter requirements of bank operations with related parties. On top of that, by spring 2021, the government will have to convene an audit of state expenditures on combating the COVID-19 infection.

Alexander Paraschiy: Among these reported IMF requirements, it seems that all the directions except the justice sphere will be easy to implement. That provides a high chance that Ukraine will be able to get more than one tranche under the new IMF stand by program.

What is more relevant at the moment is that the updated schedule of IMF board meetings makes no mention of Ukraine by June 1, which means little chance of a new SBA loan program in May. That means multi-billion financial support for Ukraine (including the IMF tranche, E.U. loans and World Bank guarantees, as well as other official financing) is postponed for June, and gross reserves will have to fall in May.

Company: Ukraine

Full company nameUkraine
Country of riskUkraine


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