REUTERS
The Ukrainian government continues the process of approval for the wording of the Memorandum under the second review of the Extended Fund Facility (EFF) program for Ukraine with the country's key creditor – the International Monetary Fund (IMF), an UNIAN correspondent reported referring to a government source.
"We continue working on the Memorandum," the source said.
The approval and signing of the Memorandum would enable the Fund to schedule a date of the IMF Executive Directors' meeting that will decide on the disbursement of the third loan tranche to Ukraine to the tune of $1.7 billion. The first two tranches totaling $6.7 billion were received in 2015.
The Memorandum was originally planned to be signed and submitted to the IMF headquarters after February 16, when the Ukrainian government was scheduled to present its report on performance to the Ukrainian parliament.
As UNIAN reported earlier, the second review of the EFF program was conducted in two stages. The IMF mission was operating in Kyiv in September, and on October 2 the talks were suspended due to the local elections in the country, as well as ongoing discussions of the tax reform and the draft state budget for 2016. In November, negotiations between Ukraine and the IMF resumed.
At present, Ukraine and the IMF are agreeing a report on the progress of reform implementation and the memorandum on the second program review, while identifying further actions. It is noted that the two sides have been discussing a wide range of issues within the framework of the second program review, which includes various aspects of monetary, banking and anti-corruption policies, the pension reform and the privatization process.
The disbursement of the third tranche is vital for Ukraine as it will help unlock further financial assistance from Ukraine's international partners, including $1 billion guarantee from the U.S. government, and loan funds from the EU and World Bank.
The approval process of the Memorandum has been delayed due to recent reports about possible resignation of the government. The government resignation has been discussed since the beginning of the year in connection with statements by several ministers that they were going to resign. In particular, such statements were made by Minister of Agrarian Policy and Food Oleksiy Pavlenko, Infrastructure Minister Andriy Pyvovarsky, Health Minister Alexander Kvitashvili, and Minister of Economic Development and Trade of Ukraine Aivaras Abromavicius. Abromavicius' resignation caused a stir within the business community and diplomatic circles, as he directly accused representatives of the Petro Poroshenko Bloc faction of exerting pressure on the Economy Ministry. After Abromavicius resignation statements were also submitted by his deputies, namely, Ukraine Trade Representative Nataliya Mykolska. A number of states, including G7 countries, the IMF and the U.S. Department of State expressed their concerns over the political situation in Ukraine.
During an extraordinary government meeting on February 4, Pavlenko, Pyvovarsky and Kvitashvili withdrew their letters of resignation. Abromavicius said he would not change his mind.
On February 10, the IMF Managing Director Christine Lagarde commented on the recent resignation of the Ukrainian Economy Minister and indicated that was an issue of concern. She said she was also concerned about Ukraine's slow progress in improving governance and fighting corruption, and reducing the influence of vested interests in policymaking.
Following Lagarde's statement, a number of Ukrainian politicians emphasized the need to foster the reform process.
As UNIAN reported earlier, the Verkhovna Rada, Ukraine's parliament, failed to score the needed number of votes for passing a vote of no confidence in the Cabinet of Ministers and refused to dismiss Prime Minister Arseniy Yatsenyuk. Only 194 MPs voted for the no-confidence with at least 226 votes needed to disband the government.