16:48 PM Saturday, May 26, 2018
IMF in Kyiv: Talks on Reform
With the IMF mission in town this week, reform goals include freeing energy prices, creating a farm land market, and anti-corruption courts with teeth
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Seems plausible to get the pension reform bill signed off over the next few weeks - assuming the Rada can focus amid all the furor around Saakashvili and the unification of the anti-Poroshenko opposition.

The big inducement is that the current pension draft includes a big hike in pensions from October. So in the current populist mood in Kyiv and the Rada, I doubt that any Rada deputy will want to be left responsible for not getting the pension hike signed off on before the winter.

It is less clear cut the timing of completion of the next IMF review. This is still up in the air.

Finance Minister Oleksandr Danylyuk spoke at the opening session of the Rada last week before embarking on this week on his London-New York tour to promote Ukraine's first eurobonds in five years. Danylyuk, a reformist, has survived attacks from political enemies as the Poroshenko government needs him as the key interlocutor with the IMF (UNIAN)

IMF Reform Targets for This Fall

With pension reform likely signed off, one issue for the Fund will be energy price liberalization. This was to have been done by April 2017, but has yet to be completed, and the government seems to be angling for a delay. Other issues are: progress on the anti-corruption courts/chamber, land reform, and the 2018 budget currently being worked up by the Ministry of Finance for presentation to the Rada next week.

It is likely the anti-corruption issues will be most difficult. They are now the most pressing for the economy, but at the same time most unpopular with Rada deputies and Ukraine's elites, given that they have most to lose -- potentially serious jail time for many.

IMF deputy MD David Lipton is in Kyiv this week, likely trying to encourage more reform momentum, and perhaps egging Rada deputies on to be more ambitious. Let's see where that goes.

Farm Land Market?

Land reform is likely not a focal point for this review – depending, that is, on how far the debate drags on. If this review gets delayed to year end, then it will be an issue for this review as well. But I think the Fund will want some kind of resolution/game plan before year end, and to prevent another year's extension on the moratorium on land sales.

Recently President Poroshenko has been talking up the need for land reform, which is encouraging. In general, land reform has got a bad spin in the press and by Ukraine's political elites. Hence opinion polls show negative perceptions. But no one has really made the positive case for land reform. The assumption is that any land sale program will just see Ukraine's elites ripping the general population off again. In this reform, Ukraine's elites have plenty of form, so you can understand why ordinary Ukrainians think this way.

Any land market reform will hence have to have plenty of safeguards to ensure a transparent and fair process. But, potentially with 10m ha of agricultural land in state ownership, this could prove to be a huge cash earner for the state, likely much more than from any privatization process.

Timothy Ash is senior sovereign strategist for emerging markets at BlueBay Asset Management in London

David Lipton, First Deputy Managing Director of the IMF (center left) and aides met Wednesday in Kyiv with President Poroshenko and his foreign policy/finance team. (UNIAN/Nikolay Lazarenko)

Ukrainian C.Bank Warns IMF’s Lipton on Economic Vulnerability

By Daryna Krasnolutska
(Bloomberg) -- While situation on financial market is
“stable” and external factors are “favorable,” Ukraine’s economy
remains vulnerable, central bank’s management board tells David
Lipton, IMF’s first deputy managing director, according to
emailed statement.
* Lipton met President Petro Poroshenko earlier Wednesday and
will meet Prime Minister Volodymyr Hroisman later
* Poroshenko, Lipton discussed implementation of education,
health care and pension reforms and “perspectives of memorandum
implementation” for next tranche disbursement, Poroshenko’s
press office says by email
* Poroshenko “separately underlined importance of creation of
effective system to fight corruption in Ukraine”
* Lipton said Ukraine should take advantage of positive
improvements in economy to complete reforms and ensure
sustainable growth
* NOTE: Ukrainian Finance Minister Sees Next IMF Tranche in

To contact the reporter on this story:
Daryna Krasnolutska in Kiev at

Ukraine’s Danylyuk Sees Pension Reform Passing Within Weeks:Rtrs

By Katharina Rosskopf
(Bloomberg) -- Ukraine on track to pass pension reform
"within weeks," Finance Minister Oleksandr Danylyuk told Reuters
in an interview.
* Says while two more tranches from the IMF had been expected
this year, at least one of $1.9b would be received for sure
* NOTE: Aug. 30, Ukraine May Get IMF Tranch at Year-end or in
2018: Eurasia
To contact the reporter on this story:
Katharina Rosskopf in Frankfurt at

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