17:01 PM Wednesday, October 17, 2018
IMF Criticizes Draft Ukrainian Law on Anti-Graft Court
Draft law not seen as creating an independent court
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By Daryna Krasnolutska

(Bloomberg) -- International Monetary Fund says it “would
not be able to support the draft law” on anti-corruption court
in its current form, Evropyeska Pravda reports, citing lender’s
letter to president’s chief of staff.

The hryvnia weakened 3.1% in 2017 -- its best performance in four years. Then, in the first two weeks of January, it lost 1.6% through Friday. On Saturday, at Bukovel, skiers lined up at an exchange point. Lack an IMF program is putting pressure on Ukraine's currency. (UNIAN/Yevhenii Kravs)

* Several provisions “are not consistent with the authorities’

commitments under the Ukraine-IMF supported program and the
recommendations of the Venice Commission of the Council of
* Draft law isn’t “conducive” to the court’s independence and
“transparent appointment of competent and trustworthy anti-
corruption judges”
* International organizations and donors should be able to
recommend members for public council of international experts
whose roles should be “crucial” -- not “just advisory” -- in
judges’ selection
* Requirement for court candidates to have considerable anti-
corruption experience in foreign jurisdiction bodies or
international court institutions “severely” limits pool of
candidates;” ban on officials who served in law enforcement or
as prosecutors in the last 10 years should be removed
* NOTE: President Petro Poroshenko submitted draft bill last

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

Timothy Ash writes: “Well done -- the IMF telling it as it is, on this really critical issue. They currently seem to have a bit of leverage in terms of conditionality, and before Ukraine comes back to market. They should use that to the full.

Head in sand from Poroshenko - he obviously does not think Ukraine needs cheap IMF financing.It always amazed me to read analysis suggesting IMF disbursements in Q1 or earlier. As is Ukraine will be lucky to get any IMF disbursement’s this side of elections next year.

In the end the basic question to ask is: "Is Poroshenko, and the majority in the Rada, serious about fighting corruption or not.?"

Timothy Ash is senior sovereign analyst for Blue Bay Asset Management in London.

Concorde Capital’s Zenon Zawada writes: “The president’s bill to create the Anti-Corruption Court, which is required by the IMF, is unlikely to draw the support of a parliamentary majority given its controversial points that are criticized by NGOs and pro-Western reformers. We expect a long, intense battle to approve legislation that will serve as a compromise between the interests of Ukraine’s fearful ruling elite and the Western establishment.”

Ukrainian Central Banker Says IMF Needed to Avoid Rate Increases

By Daryna Krasnolutska and Volodymyr Verbyany
-- Ukraine’s central bank may refrain from
raising borrowing costs further if the eastern European nation
resumes its $17.5 billion international bailout, which has been
frozen for almost 10 months as reforms lag behind schedule.
“First of all, it’s about the program from the
International Monetary Fund,” Deputy Governor Dmytro Sologub
said Friday in an interview in his office in Kiev, the capital.
Cooperation with the fund means Ukraine will proceed with a
revamp of its economy and be able to tap international debt
markets, he said.
With inflation accelerating well above target, the National
Bank of Ukraine unexpectedly boosted interest rates costs in
October for the first time since 2015. It raised its benchmark
again in December, ignoring calls from government officials who
say cheaper credit is needed to help buoy fading economic
Ukraine’s IMF loan has suffered repeated holdups as the
government fails to tackle corruption and meet other conditions
set by the Washington-based lender. Steps required for approval
of the next aid tranche include increasing household natural gas
prices, creating an anti-graft court and speeding up state-asset
sales. The hryvnia has suffered amid the delays, losing 1.2
percent this year against the dollar, the most in eastern
Having said previously that the next IMF disbursement would
come in the first quarter of 2018, the central bank now sees it
happening later than that, according to Sologub, who declined to
be more specific.

To contact the reporters on this story:
Daryna Krasnolutska in Kyiv at;
Volodymyr Verbyany in Kyiv at

Timothy Ash writes:

Spot on from Dmytro Sologub - the NBU's sage chief economist, and deputy governor. If the government does not get the IMF program back on track, foreign inflows will stall, the UAH will weaken, putting upward pressure on inflation and rates. A negative spiral would ensue. Poroshenko needs to wake up.

Posted Jan. 15, 2018

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