Ukrainian PM Says $5.5 Billion IMF Deal Can Be Sealed by April
posted
24 January 2020
23:49
Torrey Clark and Andrea Dudik,
January 23, 2020
Ukraine can finalize a $5.5 billion loan from the International Monetary Fund in the first quarter, according to the eastern European country’s prime minister.
The government reached a staff-level agreement in December that needs sign-off from the Washington-based lender’s board following the completion by Ukraine of conditions known as prior actions.
“We don’t have any disputes,” Oleksiy Honcharuk said Wednesday in an interview on the sidelines of the World Economic Forum in Davos. “It’s a working process that requires some time.”
The government had hoped for preliminary approval of the loan in September, with President Volodymyr Zelenskiy looking to lift economic growth and attract foreign investors who view the IMF as a guarantor market-friendly reforms. But question marks over central-bank independence and legal challenges to the 2016 nationalization of the country’s biggest bank have delayed a pact with the fund.
Still on Ukraine’s to-do list is passing legislation to protect the state’s takeover of Privatbank from its billionaire former owners -- a step that could be taken as soon as next month, according to Honcharuk.
But after meeting IMF Managing Director Kristalina Georgieva, Honcharuk signaled that lifting a ban on the sale of farmland -- a key plank in Zelenskiy’s economic overhaul -- may not be needed to secure the loan.
“I won’t link directly the land reform with the IMF deal,” he said. “Land reform is the key reform of the president and the government.”
A court revamp and other structural reforms were discussed at the meeting with Georgieva, which Zelenskiy also attended, according to a statement on the presidential website.
Debt Sale
The government wants to spur economic expansion in the country of 42 million to 5%, compared with this year’s “conservative” forecast of 3.7%, Honcharuk said, suggesting an even faster pace is possible in the future.
“There would be nothing extraordinary in 7% growth,” he said. “Ukraine is now the most interesting emerging market. The most serious and deep reforms are being implemented” here.
Supporting that view, Ukraine this week raised 1.25 billion euros ($1.4 billion) by selling Eurobonds with a record-low yield of 4.375%.
“We’re replacing more expensive debt with cheaper” debt, Honcharuk said. “Today’s placement will allow our budget to save 2 million hryvnia ($81,600) a day.”