But Ukraine still has a lot of work to do to restart the flow of cash from the IMF: Parliament has to pass at least 14 bills to meet the IMF’s funding conditions, according to Ukraine’s government. The government on May 1 increased gas tariffs, meeting one of the IMF’s key demands.
After a new government formed under Prime Minister Volodymyr Groysman on April 14, the IMF confirmed it was ready to restart its work with Ukraine.
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Andriy Blinov, an economics expert with the Reanimation Package of Reforms group of non-government organizations, says Ukraine’s chances of getting the money this time are high.
Gas price hike
“The Ukrainian government reckons there are 14 to 19 necessary bills, as I understand it, based on their official statements,” he told the Kyiv Post. “But we have to understand that situation is now altered, as Ukraine has agreed to bring its gas prices to market levels.”
The IMF’s main requirements, according to Blinov, are related to subsidies, utility tariffs, privatization and the corporate management of state enterprises.
“The question is: How determined and prepared is the Ukrainian government to sell state monopolies – not to earn money for the budget – but to actually sell them?” he said.
Ukrainian Vice Prime Minister and Economic Development and Trade Minister Stepan Kubiv said on May 10 that the Verkhovna Rada has to pass 14 bills “vital for further cooperation with the IMF.” He urged lawmakers to review eight of them over the next week.
Among them are bills concerning the establishment of a state business ombudsman’s office, improvements to local fiscal service offices, the regulation of the natural gas market, as well as the privatization and corporate management of state-owned enterprises.
Earlier, Ukraine’s National Reform Council published a list of 19 laws that it said the Ukrainian parliament has to adopt to get the long-awaited funds from the IMF, including some of the legislation mentioned by Kubiv.
Most of the bills listed were already drafted by the previous government, but will have to be submitted to parliament once again by the new Cabinet.
Meanwhile, Valeriya Gontareva, head of the National Bank of Ukraine, met IMF mission members in Kyiv on May 10, according to the bank’s press service. Gontareva reported after the meeting that the central bank has fulfilled all the requirements of the IMF program.
Final list on May 18
Blinov said the final list of Ukraine’s commitments to the IMF would be announced no earlier than May 18, after the mission’s visit to the country ends.
If Ukraine meets these conditions, it will not only receive the next IMF tranche of funds, but also unlock an additional $3.5 billion in aid from the United States, the European Union and other donors.
“Ukraine hasn’t received a cent since last fall — we survived the winter and almost the entire spring without external financing,” Blinov said. “We’re signing agreements, but we’re not getting any money, because the IMF program is frozen.”
19 laws needed
The 19 IMF-required laws are to:
• Create a mechanism for voluntary debt restructuring at Ukrainian enterprises, designed to help debtors gain financing and thereby “stabilize the financial system of Ukraine.”
• Allow certain executive bodies to hire more deputy heads. This primarily concerns Ukraine’s State Fiscal Service, which, according to the IMF, should have five departments but currently only has two deputy heads.
• Incorporate the Customs Service in the structure of local offices of the State Fiscal Service.
• Make it simpler and quicker for taxpayers to lodge administrative appeals to tax rulings. Under the proposed law, taxpayers will be able to appeal directly to the State Fiscal Service.
• Establish an independent state-funded institution of business ombudsman.
• Decrease the number of regulating and controlling bodies of non-banking financial institutions.
• Improve the functioning of the gas market.
• Restructure debts of Ukrainians who took out loans in foreign currency to buy an apartment.
• Reduce the number of agricultural enterprises that are banned from privatization.
• Remove 13 seaports and several enterprises connected with marine transport from the list of state-owned enterprises that cannot be privatized.
• Exclude four energy companies from the list of state companies that cannot be privatized.
• Remove public companies from the privatization ban list. The bill primarily concerns Ukraine’s state railway administration, Ukrzaliznytsya.
• Change the mechanisms of corporate management at state-owned banks through creating supervisory boards made up of independent directors.
• Hire new management for state-owned companies and institutions.
• Improve legislation on state controls over business. The bill is designed to “increase the level of trust between businesses and state regulators.”
• Allow the National Securities and Stock Market Commission to check enterprises with a yearly income of less than Hr 20 million without having to gain permission from the Cabinet of Ministers.
• Simplify the process of obtaining state-issued documents.
• Allow the enforcement of court decisions not only by state bailiffs but also by private companies.
• Broaden the list of court decisions subject to mandatory enforcement, as well as permit the sale of arrested assets via online tenders.
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