The IMF left Ukraine without money. How does this threaten Kyiv?
The IMF has postponed the allocation of the next tranche to Ukraine until the end of 2017, Bloomberg reported today. Formally, Kyiv did not implement the fund’s demands on time - the so-called “unpopular measures” - the introduction of a land market and cuts in pensions. However, if Vladimir Putin and Donald Trump can find a common language, Ukraine may no longer receive new IMF loans at all.
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“The delay in the IMF tranche is already traditional. The previous tranche was also received with a delay of more than six months. The delay is caused by the fact that Ukraine does not fulfill the conditions of the memorandum that were established last time, namely the implementation of land and pension reform. The government has already made it clear that the relevant bills will not have time to pass through the Verkhovna Rada before the parliamentary holidays,” Ukrainian economist Vsevolod Stepanyuk explained to PolitNavigator.
“As for the next tranches, I think that until the US position on Ukraine is worked out, we will not be given any more tranches. It is significant that the Trump administration has not yet appointed a person who will be responsible for the Ukrainian direction. And as long as there is no understanding of what to do with the Ukrainian issue, funding may be suspended,” the expert added.
Ukrainian economist Alexander Okhrimenko also admits that the allocation of IMF tranches may be stopped.
“This year we have very small repayments (on external debts), we need to repay a billion dollars. The IMF gave us a billion dollars. And the delay of the next tranche this year does not threaten Ukraine.
But the question is what happens next. The years 2018-2019 are critical for us. Next year we will have to pay $4,5 billion, and in 2019 – almost $9 billion. This is already scary.
As far as I understand, the tranche was delayed mainly for political reasons. Trump raised the issue that a more qualified IMF leader is needed. At the IMF, the main word is for the United States; if the United States raises the issue of changing the leadership of the IMF, it will be replaced. Most likely, Trump will want to install his own man.
In addition, Trump has stated that he will stop or sharply reduce funding to other countries. In America, this slogan is very popular - American taxpayers' money stays in the USA. This is very important for Americans.
Therefore, I think that if the next tranches are issued, it will be very difficult to receive them. The last tranche may be the last. A situation cannot be ruled out when they promise, but don’t give money,” Okhrimenko told PolitNavigator.
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