Page 7 - UKRRptNov18

2.0 Politics
2.1 A new IMF deal on the cards
Ukraine and the country's main donor, the International Monetary Fund (IMF), are discussing possible repackaging undrawn funds from the existing $17.5bn Extended Fund Facility (EFF) agreed in 2015 into a $5bn-$6bn Stand-By Arrangement (SBA), according to the Ekonomichna Pravda online outlet.
The new support programme will be drafted and cover a 12-15 months period rather than the five year long programme currently in place, according to the publication. The current IMF deal is due to expire next year in any case. The increase of the gas price for households will remain among crucial condition for its implementation, the outlet reported citing unnamed sources in Kyiv. The Ukrainian government needs to accede to a 23% hike in the gas price for households by October 23 as part of the current talks, the outlet revealed.
Among other preconditions is a set of anti-corruption measures, specifically, the IMF insists that the country's main anti-graft body the National Anti-Corruption Bureau of Ukraine (NABU) should be responsible for checking the electronic declarations system of Ukrainian officials, which was launched in 2016. Currently the e-declarations are policed by the General Prosecutor’s Office and while the declarations made this year have revealed malfeasances no significant action has been taken.
Another key IMF requirement is approval of the 2019 state budget with a affordable deficit. Elsewhere it has been reported that the IMF insists the budget deficit is capped at 2.5% of GDP.
According to Timothy Ash, a senior sovereign strategist at BlueBay Asset Management, there are talks on the market that the first tranche under the new programme will amount to $1.9bn.
"Does not seem like there will be any new money, just repackaging undrawn money from EFF. Assume reform conditionality will remain unchanged," Ash wrote in a note recently. "Seems unlikely we will see any additional disbursements of IMF money beyond this $1.9bn this side of elections in March."
"But will likely help Ukraine's Finance Ministry to come to market this autumn to raise some new money and do another liability management exercise," the expert added.
Ukraine has received $8.4bn from the IMF so far under the multinational lender's EFF.
Meanwhile, Ukraine’s Social Policy Minister Andriy Reva said on September 26 that the nation's government may decide to refrain from hiking prices for natural gas for households and heating utilities in October.
It's possible that a cabinet resolution setting below-market gas prices will be
7 UKRAINE Country Report November 2018 www.intellinews.com