Finance Ministry reflects on steps required to succeed in IMF talks

The IMF's current Stand-By Arrangement for Ukraine could be extended for at least six months, but the chances of achieving constructive results would have been greater if the IMF mission had worked on the ground rather than via video conference.

That's according to Finance Minister Serhiy Marchenko who spoke with LIGA.net.

"Energy issues are on the agenda: gas and electricity markets, then there's anti-corruption policy and judicial reform. As part of the finance ministry's competence, there are discussions regarding the budget balance for 2022-2023: the IMF sees the need to reduce the deficit to 3.5% of GDP, we would like to soften this movement, because reducing the budget deficit by 2% every year is a politically challenging task for any finance minister," Marchenko said.

"We were able to agree that after changing the arrangement last year, which was proposed by the Fund, taking into account the coronacrisis, about six items were taken off the agenda. That is, we reduced the number of structural beacons. But this is an extremely rare case. Moreover, we're seeing a rollback on obligations fulfilled in the framework of previous arrangements, so the IMF reasonably raised the issue," added Marchenko.

"When we sit at the table, we can convey our position easier and faster than via video communication. With the latest mission, we exchanged certain statistical data for several days, in particular, regarding the fiscal part. But these are all nuances. The IMF needs to understand that we are moving at a sufficient pace to fulfill our obligations. In the conditions of a mission on the ground, it would be easier for us to show progress and readiness to fulfill obligations, "he explained.

Read alsoIMF to continue discussing reform with Ukraine"We're already uncomfortable [without IMF money]. We have no opportunity to get income from another source. The IMF arrangement is our baseline scenario."

IMF in Ukraine: Background

• On June 9, 2020, the IMF's Executive Board adopted an 18-month Stand-By Arrangement (SBA) worth SDR 3.6 billion, or about US$5 billion, aimed at helping Ukraine overcome the consequences of the COVID-19 pandemic.
• On June 12, Ukraine received the first IMF disbursement worth US$2.1 billion under the SBA.
• In late November, the Finance Ministry reported on the successful completion of talks with the IMF on benchmarks of the draft budget for 2021, which was one of the major prerequisites for starting the SBA review.
• On January 11, 2021, an IMF mission resumed work in Kyiv, they worked until February 12 but departed without issuing any decision on the SBA review.
• The IMF is holding up its loan to Ukraine due to the fact that the country is yet to fulfill some of the obligations it has undertaken, including in previous years, said Minister of Finance Serhiy Marchenko.