The Ukrainian government and the International Monetary Fund mission have not come to an agreement to disburse another tranche of aid to the country, the Ukrainski Novyny news agency reported on Sept. 20
The IMF now will not restart financing until the Verkhovna Rada passes the 2019 state budget, the report read. As the budget is typically passed in December, this means Ukraine is unlikely to receive the money before the end of the year, bring the country closer to defaulting on its debts.
The IMF mission arrived in Ukraine on Sept. 6 and left on Sept. 19. Ideally, the two sides were supposed to sign a memorandum of cooperation by the end of the visit. That agreement would launch a new financing program, known as a Stand-by Arrangement, Ukrainski Novyny wrote. The IMF would then end the current Extended Fund Facility, or EFF, with Ukraine.
Such an approach would allow the signed document to be confirmed by the IMF’s Board of Directors in October, and Ukraine could receive $1.9 billion later that month.
But the IMF’s demand that Ukraine first pass the 2019 budget caught the government off guard. It previously expected that the issue of the budget would only arise in December, as the country readied to receive the second tranche of aid.
“The discussions were ‘fruitful and constructive,’ but the creditor wants to see a passed budget for 2019 before disbursing the tranche,” Halyna Kalachova, a journalist at news agency Ekonomicha Pravda, wrote on Facebook, citing unnamed sources. “Naturally, the budget should be balanced and appropriate.”
“The negotiations may continue during the president’s visit to the United States next week,” she added.
Without external financing, Ukraine risks a currency collapse due to shrinking foreign exchange reserves.
Earlier in the week, Ukraine’s prospects for receiving IMF financing looked better. On Sept. 18, Kyiv came to a preliminary agreement with the international lender to gradually raise gas prices for domestic consumers to market levels by 2020.
Gas prices had long been a sticking point in negotiations between the two sides.
