Page 9 - UKRRptFeb19

8) An audit of the operations of the National Anti-Corruption Bureau should be completed by July.
The key prior action that Ukraine must remain committed to in order to maintain IMF cooperation is hiking natural gas rates for households and heating utilities by about 15% since May 2019.
Among other measures that are not structural benchmarks, the government committed to work on developing land reform, to complete the “big privatization” of three companies (the Indar pharmaceutical firm, the Krasnolymanska mine, and the President Hotel) in 1H19 and to privatize at least 500 “small privatization assets” by April.
The list of structural benchmarks and prior actions does not look difficult, so we see a high probability that Ukraine’s cooperation with the IMF will continue in 2019, and the country will receive at least one new tranche under the program next year.
“At the same time, we warn our clients that much in Ukraine’s cooperation with the IMF will depend on the results of the presidential elections this spring. If a liberal politician committed to Western cooperation wins the election (Petro Poroshenko or Sviatoslav Vakarchuk), further cooperation will very likely continue. If a populist candidate wins (Yulia Tymoshenko, Volodymyr Zelenskiy or Oleg Liashko), the chances for Ukraine to remain in the IMF program will be much smaller. Recent polls suggest the populist candidates have stronger electoral support right now, but in our view, the probability of a liberal president winning is still realistic,” Alexander Paraschiy of Concorde Capital said in a note.
2.3 Ukraine’s cabinet to liquidate State Fiscal Service
Ukraine cabinet moves to liquidate State Fiscal Service. The Cabinet of Ministers of Ukraine approved on December 18 a resolution with reworking to reorganize the State Fiscal Service back into the State Tax Service and State Customs Service. Contests to determine their heads will be conducted in the three months after the resolution is finally approved, said the Finance Ministry, which will create a commission to oversee the reorganization. These bodies will be organized under the ministry.
The State Fiscal Service became notorious when its former head and close President Petro Poroshenko ally Roman Nasirov was indicted on corruption charges. Nasirov arrest was billed as the “first big fish” to be netted in the nascent anti-corruption drive and the first member of the government elite to be indicted by the National Anti-Corruption Bureau of Ukraine (NABU), in became a test of Ukrainian justice system. It was a test the system has failed. He is accused of giving an order that cost the state budget UAH2bn (€70mn). In March, Nasirov was released from custody in Kyiv after his wife posted the UAH100mn (€3.5mn) bail. He has yet to be put on trial. In December a court ruled that he was wrongfully dismissed from his post and should be reinstated, making a mockery of the anti-corruption fight.
The government resolution takes into account IMF recommendations and the government’s mid-term plan for priority actions until 2020, the statement said. “The division of the State Fiscal Service into two services is an important step
9 UKRAINE Country Report February 2019 www.intellinews.com