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Economist: win-win time has passed for reforms

The IMF requirements are getting increasingly hard to implement. The Rada is not ready to fulfil them.

Economist: win-win time has passed for reforms
Dmytro Yablonovskyy
Photo: Photo: Serhiy Nuzhnenko

The senior economist of the Center for Economic Strategy, Dmytro Yablonovskyy, believes that the International Monetary Fund will become increasingly difficult to implement as elections loom large.

"It seems to me that the time of win-win reforms has passed. All of these reforms [that the IMF requires] are increasingly unpopular as that affect the interests of the politicians,"

Yablonovsky told a round table conference in Gorshenin Institute on 7 July.

"These reforms have stalled because they are complex. The parliament would have gladly voted for something that makes everybody happy," he said.

In addition, lawmakers are not ready to vote for the laws that are fraught with harm the voter in the short-term perspective.

"[These reforms] could deliver a positive effect in two or three years but need sacrifice in the immediate future. The closer the elections the less the deputies are inclined to vote for austerity reforms," he said.

In the meantime, Ukraine will have to start paying off foreign debts in 2019 which will be hard to do without IMF loans.

In March 2015, the IMF opened a four-year program EFF for Ukraine with a total volume of SDR12.348bn (about 16.75bn dollars at the current rate) with the first tranche of 5bn dollars. Initially, it envisaged a quarterly revision of the program and the allocation in 2015 of three more tranches of SDR1,18bn (about 1.6bn dollars) and a decrease in quarterly tranches in 2016–2018 to SDR0.44bn 0.6bn dollars).

Ukraine received a second tranche with a short delay of 1.7bn in early August 2015, after which there was a long pause in connection with the failure of a number of conditions, a political crisis and a change of government.

After the arrival of the new Cabinet headed by Groysman in April 2016, talks on the continuation of funding were resumed, but the IMF decided to allocate a third tranche of 1bn dollars only in mid-September, the fourth – on April 3, 2017.

According to the new schedule, three revisions were planned by the end of 2017: the fourth in mid-May, the fifth in mid-August, the sixth in mid-November. If the authorities successfully meet the requirements set by the program, Ukraine may raise 1.907bn dollars following the results of the fourth revision, 1.28bn after the fifth revision, and 1.28bn in the sixth, 4.46bn dollars in total.

In 2018, the next four revisions are planned, following which Ukraine can attract about 955mn dollars. In all - about $ 3.82bn.