Exclusive-Ukraine to seek new IMF loan programme after June, PM says

Exclusive-Ukraine to seek new IMF loan programme after June, PM says
© Reuters. Ukraine\’s Prime Minister Denys Shmygal attends an interview with Reuters in Brussels, Belgium, November 30, 2021. REUTERS/Johanna?Geron

By Robin Emmott

BRUSSELS (Reuters) -Prime Minister Denys Shmygal said on Tuesday Ukraine would seek another International Monetary Fund loan programme when the current one ends in June next year to signal to investors that the country is committed to reforms.

The IMF said on Nov. 24 Ukraine could secure loans worth $2.3 billion next year by sticking to a path of reform to stamp out endemic corruption and organised crime, improve corporate governance, carry out privatisations, ensure the independence of the central bank and judiciary, and maintain fiscal discipline.

Shmygal told Reuters in an interview that he was hopeful of one or two further disbursements under the existing, recently extended IMF programme in the first six months of 2022.

\”We would like to negotiate with them to have one or two (loan) tranches during next year,\” Shmygal said, adding that this would hopefully be in the first six months of 2022. \”I believe we will begin negotiations for the next IMF programme because it\’s what we really need for Ukraine.\”

Asked how much a new programme with the Washington-based global lender might be, he said another $5 billion – the same size as the existing loan – would be welcome, but what mattered was the programme itself.

\”Money is important, but more important is the signal that Ukraine…is on the way of reform. An IMF programme and macro-financial support (from the European Union) are indicators for investors that the country is stable.\”

Shmygal, who is in Brussels to meet top European Union officials, said he would discuss a continuation of the EU macro-financial assistance programme, but that it would be linked to progress with the IMF.

\”We are trying, we do our best to make very fast reforms … judicial reform is the mother of all reforms in Ukraine,\” Shmygal said. \”The resistance (to change in the judiciary) is so great because this system is corrupted on all levels.\”

Last week, Ukraine finally won nearly $700 million in new IMF financing and an extension of its $5 billion programme until next June. Loan disbursals had effectively been frozen due to concerns over a lack of progress on reforms.

One of Europe\’s poorest countries, Ukraine is being urged by the West to reform to help qualify for eventual accession to the EU. The former Soviet republic secured an IMF deal in 2020 as it was dragged into recession by the COVID-19 pandemic.

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