IMF Ends Ukraine Loan Review With No Deal on Next Tranche

The International Monetary Fund ended a remote review of its $5 billion loan program with Ukraine without clearing the next tranche because conditions haven’t been met.

The Washington-based lender held discussions with the Ukrainian government for more than a month as the country sought a $700 million disbursement, originally due in September 2020. Talks focused on areas including strengthening governance of the central bank, improvements to the legislative and regulatory framework for bank supervision, and strengthening anti-corruption systems, according to the IMF.

“The discussions were productive, but more progress is needed to support completion of the first review under the program,” Goesta Ljungman, head of the IMF’s Ukraine office, said in a statement on Saturday. “Discussions will continue.”

Ukraine wants the next chunk of IMF assistance to help mitigate the damage the coronavirus crisis is doing to its economy, with the country of 40 million people exiting its latest lockdown last month. The disbursement is being held up because of concerns over waning anti-graft efforts, threats to central bank independence and the reintroduction of natural gas subsidies for households.

“We are awaiting the IMF feedback on the policy proposals shared with them during the mission,” Finance Minister Serhiy Marchenko said in an emailed statement. “Ukraine remains committed to its reforms agenda and fruitful partnership with the IMF.”

Policies include clarifying the legal status of the National Anti-corruption Bureau, legislation on the High Council of Justice and policy proposals in the fiscal, energy and financial sector areas, Marchenko said.

Once the set of actions is agreed on, the government will work on their implementation, he said. In the coming weeks, the cabinet is counting on parliament’s support for the draft legislation already discussed with the IMF, Marchenko said.

President Volodymyr Zelenskiy said Saturday in a separate statement he will submit draft bills to improve the judicial system next week, and “insist” lawmakers debate them “quickly.”

Other international aid, including from the European Union, is dependent on Ukraine’s progress with the IMF.

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