A new tranche of the IMF: called new conditions of cooperation


The obligations assumed by Ukraine.

The international monetary Fund (IMF) announced a new Memorandum of cooperation with Ukraine, according to which our country should receive the next tranche. Experts rate assumed by Ukraine, reports the Chronicle.info with reference to Comments.

Cooperation between Ukraine and the IMF will have a positive impact on the economy

According to political analyst Maksym Mankovsky, in the current environment of economic decline and the shortfall in the budget, get money from the IMF, even in a crisis, and not to support the program of structural reforms, as planned before, is already a positive thing.

“As they say now can’t be choosers, – said the expert. – If you carefully look at the concrete steps and commitments by the government of Ukraine (as recorded in the new Memorandum of cooperation), I would divide them into three parts. First – those which are already partly or fully completed. It concerns issues of “banking sector” and “land reform”. The second part – that may perform in the near future, the main thing is to have political will. Is it a problem to make a transparent audit of the Fund for the financing of the cost of dealing with the coronavirus? And the third part – the fact that we are unlikely to implement fully in the near future (and most interesting is that both sides understand this, but enter for the significance and importance of intentions). For example, I can’t by the time large-scale privatization, unless of course we do not pursue the goal to sell all for next to nothing that failed to steal the oligarchs and their environment over the last thirty years.”

Maxim Mankovsky emphasizes that, under many points of this Memorandum, he would have signed up without hesitation, because he understands and without prompting the IMF is needed in our country.

“Well, who will fight against corruption and, in particular, restore order in the sphere of the High Council of justice? Everyone is saying that we need to get rid of the monopolies and introduce market prices for gas – lists the analyst. – How many copies broken in the last year around health reform. But most reasonable people understand that staying with the old Soviet system of medical care impossible. Yes, of course, there are errors in the so-called “reform Suprun”. But we must not whine and throw mud at, and work together to fix it… by the Way, well, that in the agreement there is no stupidity like the requirement to obtain debts for utilities that have spread lately in the information space”.

According to Maxim Mankovsky, he would have described the MOU this way: we must begin to live within our means, to pay taxes, to control the power and not think that someone needs.

Cooperation between Ukraine and the IMF: what’s new

The head of public organization “Re:Start”, a shareholder of the Bank “unison”, financial expert Oksana Chepizhko notes that a formal Memorandum of understanding, in fact, does not differ from the previously published “draft”.

“This suggests that faced with a choice – credit or sovereign default – our government chose the first option, – the expert believes. And that is called “hit”… All taken by Ukraine of the obligations can be divided into two components. The first – guarantees of debt repayment. The second – and economic preferences for large foreign businesses to the detriment of home”.

The first, according to Oksana Chepizhko can be attributed to the struggle with the consequences of a pandemic, tax and medical cases, and also the macroeconomic policy framework. The second is the banking sector, energy and the land question.

“Given that during the end of 2019-beginning of 2020 the negotiations with the IMF were held in extremely difficult circumstances and for the allocation of a new loan has affected the political decision not to admit Ukraine sovereign default, it can be assumed that the Foundation was laid by a number of non-public requirements, – said the expert. For example, the revision in 2021 of the law on the land market and complete privatization of state banks, not just one of “Oshchadbank”. This may depend obtaining the following tranches”.

With regard to their feasibility, it is, according to Oksana Chepizhko, a matter of political choice of the current government – wants it to be formal or real?

“After 100% implementation of IMF conditions will transform our current government into a kind of English Queen who reigns but does not govern, – says the expert. – Meanwhile, in the autumn local elections be held. And such measures as raising tariffs and the reduction of social costs can seriously affect the outcome of the “public Servants” and the ratings of the President. Moreover, the IMF in its press release, notes that even the disbursement of a tranche does not guarantee macroeconomic stability in the country before the end of 2020.”

Cooperation between Ukraine and the IMF: the key points

The political scientist, expert of the Ukrainian center of social development, candidate of philosophical Sciences Yuri Podorojnii recalls that according to the signed Memorandum of cooperation with the IMF, Ukraine will immediately receive a tranche in the amount of 2.1 billion dollars. And full implementation of the commitments will get in total $ 5 billion loan over the next year and a half.

“The top world theme coronavirus did not pass the Memorandum, and therefore the loan is presented as a help to the world in the fight against coronavirus. And the first tranche goes to the state budget as such support – said Yuri Podorojniy. – After payment of our liabilities and funds spent in previous periods in the state budget-2020 was provided for 40% of all costs. So credit really has become a significant support for our economy and offset the possibility of default, the probability is increasingly loomed on the horizon. But during quarantine measures significantly decreased revenues, despite the fact that costs have not decreased. This means that Ukraine has once again received funds for decumulation, which do not solve the key challenges of the Ukrainian economy”.

In the Memorandum, political analyst, highlight two key questions is “andikalovsky the law” and changes in the gas market.

“Gas all clear – we are waiting for another price increase, warns Yuri Podorojniy. It’s hard to even imagine how much it will cost for the simple warmth of a Ukrainian winter. By the way, these increases will continue throughout the program, i.e., the next half of the year. The IMF firmly believes that Ukrainians pay for utility bills low, and therefore unfair price. However, the Memorandum does not answer the key question: how to survive ordinary Ukrainians after the increase in the cost of utilities, which the government persistently called a reduction?”

The banking sector reform has been devoted more attention in the Memorandum, the expert emphasizes.

“The agreement reinforces the independence of the banking system, but in fact – its dependence on international institutions, – says Yuri Podorojniy. And this applies to both private financial institutions and public sector. It becomes apparent that there is a global theft in the state banking institutions under the guise of loans. This is a cover of the NBU (from its reserves) and the honest taxpayers who have to pay sky-high interest rates”.

Estimating the orientation of lending of the IMF, the expert cites the example of the tale of Pinocchio, when the doctor diagnosed a fabulous character with the words: “the Patient is more dead than alive.”