Cooperation with IMF remains a priority for Ukrainian authorities, Zelenskiy says

Cooperation with IMF remains a priority for Ukrainian authorities, Zelenskiy says
Ukraine's new president Volodymyr Zelenskiy says he plans to stick to deals made with the IMF
By bne IntelliNews July 3, 2019

Cooperation with the International Monetary Fund (IMF) is a priority for the Ukrainian authorities, the nation's President Volodymyr Zelenskiy told IMF first deputy managing director David Lipton in Toronto on July 2.

"We would like to continue our relations with the IMF. I want to put emphasis on that," Zelenskiy's media office quoted him as saying. He added that Ukraine has achieved macroeconomic stability, yet this is still not enough. "We will do our best for Ukraine to thrive."

The IMF is going to wait until after the July parliamentary elections in Ukraine before resuming talks on further cooperation with the country, IMF spokesperson Gerry Rice said at a briefing on June 13.

"[The] elections are about to be held there and, we are waiting for the end of the elections before we will be able to move forward with further discussions," Rice said, according to a transcript of his briefing. "We did have a staff visit there and we did have some initial discussions, but we want to wait for the elections before we will be moving forward."

The statement followed Kyiv's offer to launch a new three to four-year Extended Fund Facility (EFF) programme with the IMF by late 2019 to replace the shorter term Stand By Agreement (SBA) that has to be renegotiated every one and half years. Ukraine used to have an EFF but was downgraded to a SBA thanks to former President Petro Poroshenko foot-dragging on reforms, especially his reluctance to push through anti-corruption measures.

According to newly appointed deputy head of the presidential administration Oleksiy Honcharuk, Kyiv "is really starting to think about a new three-four-year programme with the IMF, so that we can launch it at the end of the year if the necessary conditions for this appear."

In late May, the IMF's mission Ron van Roden told President Volodymyr Zelenskiy that the Fund is ready to discuss further cooperation with Ukraine after the nation's snap parliamentary elections scheduled for July.

Central bank's independence

Zelenskiy also assured Lipton of the independence of the National Bank of Ukraine (NBU), according to his media office.

Kyiv-based experts and reform-minded officials are worried about possible replacement of the NBU's governor Yakiv Smolii and his deputies after Zelenskiy's victory. The new president is widely considered to be sponsored and mentored by the nation's oligarch Ihor Kolomoisky, who is an implacable enemy of the NBU.

On May 21, Zelenskiy appointed Andriy Bohdan as head of the presidential staff. Bohdan is a chief lawyer for Kolomoisky. The businessman, former co-owner of the nation's largest lender PrivatBank, returned to Ukraine on May 16 from Israel, ending an absence in Ukraine that began in June 2017. On May 12, another former co-owner of PrivatBank, Gennady Bogolyubov, also returned to Ukraine from Israel.

Kolomoisky is locked in a snowballing legal dispute over the December 2016 nationalisation of his bank PrivatBank. On April 18, the Kyiv Administrative Court backed Kolomoisky's lawsuit, ruling that PrivatBank's nationalisation was unlawful that has unsettled the likes of the IMF which saw the nationalisation of the bank as a major victory for the government’s efforts to clean up a rotten banking sector.  

On April 8, Kolomoisky said that he is going to seek $2bn of compensation from the nation's government. "I don't need [to get back] PrivatBank. But there was $2bn in capital there. Let them [the Ukrainian government] return it to me and there will be no problems," Kolomoisky said in an interview with the Ekonomichna Pravda online outlet.