After the International Monetary Fund (IMF) ended its review in February without allocating the next part of its $5bn loan to Ukraine, Kyiv is now expecting to receive a $700mn tranche by early June, former economy minister Tymofiy Mylovanov said in an interview with BBC News Ukraine on February 26.
Mylovanov, who is currently a top advisor to President Zelenskiy’s Chief of Staff Andriy Yermak, said that the funds will help foster sorely needed economic stability throughout the summer. With that in mind, he hopes that the IMF and Ukraine will reach a staff-level agreement on the loan by late May.
The Ukrainian government also hopes to secure a €600mn macro-financial supplement from the EU in the autumn, though this will be contingent upon first securing the $700mn tranche from the IMF.
Ukraine has already received $2.1bn from the International Monetary Fund based on the aforementioned loan agreement, which was reached in May 2020 to address the coronavirus (COVID-19) pandemic. As Mylovanov told the BBC, the IMF delayed loan allocation in February because Ukraine had not met the conditions of the agreement. In particular, ongoing problems with the High Council of Justice and the National Anti-Corruption Bureau (NABU) have hindered the negotiations, he said.
However, back in February, Zelenskiy blamed unnamed domestic “lobbyists” for disrupting Ukraine’s co-operation with the IMF. Nevertheless, the president assured that Ukraine would get its next IMF tranche before the end of year, but added that there’s a “plan B” in the event that this falls through.
On March 1, presidential aide Oleh Ustenko underscored the need to enact judicial reforms and bolster anti-corruption infrastructure, offering reassurances that the government is implementing programmes to address the IMF’s concerns. Ustenko added that securing the next part of the IMF loan would be a positive signal to international investors; foreign direct investment (FDI) to Ukraine may even reach $3bn this year, he said.
This article originally appeared in FPRI's BMB Ukraine newsletter. Click here to learn more about BMB Ukraine and subscribe to the newsletter.