President of Ukraine Petro Poroshenko has expressed his confidence that the International Monetary Fund (IMF) will, in the near future, announce its decision regarding the disbursement of the third loan tranche to Ukraine, within the framework of the Extended Fund Facility (EFF) program approved last year, a UNIAN correspondent reported.
”I am sure that a meeting of the International Monetary Fund will take place in the near future, along with the disbursement of the tranche, that will provide the financial support for reforms undertaken by the president, the prime minister, the government, and local authorities. I am confident that a victory is ahead of us,” Poroshenko said in Vinnytsia, during celebrations to mark the Day of the City.
As UNIAN reported earlier, the IMF approved the Extended Fund Facility (EFF) program for Ukraine, worth US$17.5 billion, in March 2015 for a four-year period. Last year, Ukraine received two tranches of $5 billion and $1.7 billion, respectively.
In autumn 2015, while Kyiv was awaiting the EFF`s second review for the disbursement of the third tranche, worth $1.7 billion, the situation in Ukraine was complicated by local elections in October 2015 and, later, by serious political debates regarding tax reforms and the 2016 budget. Cooperation with the IMF was then frozen. Early in 2016, the political confrontation between the different branches of government in Ukraine increased.
IMF Managing Director Christine Lagarde called upon Ukrainian authorities to look for a political compromise and implement urgent measures to end corruption, but talks with the IMF resumed only late in April 2016, following the formation of a new Ukrainian government headed by former parliament speaker Volodymyr Groysman.
The two sides returned to the second review of the cooperation program and agreed, according to Ukrainian authorities, on all matters in the Memorandum of Cooperation, which included assessments of the reforms and tasks for the future.
The memorandum was expected to be signed early in July, and the IMF`s Executive Board was to consider the Ukraine issue late in July, in a bid to pave the way for distributing the third tranche. Its sum was also under discussion, varying from $1 billion to $1.7 billion.
However, the document has not been signed, and the Ukraine issue has not yet been considered.
In late August, Ukraine`s Finance Minister, Oleksandr Danylyuk, stated in an interview with Reuters that Ukraine was ”very close” to obtaining the third tranche from the IMF.
He noted that the country was not experiencing an acute need for IMF financing, but the IMF loan would unlock other financial support for Ukraine. In particular, Ukraine could receive $1 billion for the budget, which would be guaranteed by the United States, along with EUR 600 million of macro-financial assistance from the European Union and a US$500 million loan from the World Bank to purchase gas during the heating season.
On September 1, IMF spokesperson Gerry Rice said that the IMF would soon conclude its latest review of Ukraine`s $17.5 billion bailout, and he expected the board to decide on the tranche in the second half of September.