Page 9 - UKRRptJun20
P. 9
An IMF staff team led by Ivanna Vladkova Hollar concluded remote discussions with the Ukrainian authorities on May 21 and reached a staff-level agreement on economic policies for a new 18-month SBA, the IMF said in a statement on May 22.
The deal will also allow Ukraine to tap more donor money from partners like the World Bank and the EU, which have pledged significant amounts of money, but which was all tied to first getting an IMF deal in place. Earlier Kyiv said that it could receive some $10bn in aid this year.
"The new SBA, with a requested access of SDR3.6bn (equivalent to $5bn), aims to provide balance of payments and budget support to help the authorities address the effects of the COVID-19 shock, while consolidating achievements to date, and moving forward on important structural reforms to reduce key vulnerabilities," Hollar said in a statement emailed to bne IntelliNews the same day. "This will ensure that Ukraine is well poised to return to growth and resume broader reform efforts when the crisis ends. The arrangement is also expected to catalyse additional bilateral and multilateral financial support," she added.
Ukrainian Finance Ministry Serhiy Marchenko said on May 21 that he expects the first tranche from the new $5bn programme to arrive before the end of the month. Ukraine has to repay some $2bn worth of debt, mostly to international financial institutions (IFIs), by the end of this month.
Marchenko also said that he expects the programme to last 18 months. The SBA represents a downgrade from the previously agreed Extended Fund Facility (EFF), a longer-term and more comprehensive deal. However, the IMF said last month that it was switching to the simpler and shorter SBA because of the “unprecedented economic instability” caused by the double whammy of the oil price shock and the coronavirus pandemic.
The change of status was an implicit rebuke for the difficulty Kyiv has had in passing the banking law. The EFF deal was agreed in December, but was not approved by the IMF board of directors and was made contingent on the passage of both the banking law and a bill to create a market for land. The land bill was passed on March 30 in a late night session, but in a massively watered down form that limits sales to small plots and calls for a referendum before sales to foreigners can be allowed, gutting the bill of all its short-term economic benefits.
Oligarch Ihor Kolomoisky, who has been lobbying to have his PrivatBank returned to him after it was nationalised in 2016, is the object of the new banking bill and has attempted to sabotage its passage, slowing the process down.
The presidential media service said on May 21 that the implementation of the law will help improve the "quality and efficiency of the National Bank of Ukraine (NBU)'s fulfilling its functions in the field of banking regulation and supervision, complete the withdrawal of banks from the market/liquidation of those banks, the decisions on which have been cancelled by courts".
“President signs Law on banks necessary for co-operation with IMF. This document fills the legal gaps found during the banking system cleanup in
9 UKRAINE Country Report June 2020 www.intellinews.com
