Ukraine adopts laws critical for second IMF tranche

Макроэкономика 17.07.2015 Ukraine’s parliament approved five bills on July 16 that are critical for the IMF to approve a USD 1.7 bln second tranche of its External Fund Facility program with Ukraine. In particular, MPs voted in favor of a bill that cuts bankrupt companies from natural gas supplies, a bill that requires the state to establish market-level utility rates, a bill that enables the Anti-Corruption Bureau to conduct pre-trial investigation of false information in state officials’ declarations, a bill that clearly defines the information that state officials should report in their declarations and a bill that simplifies the mechanisms of bank bankruptcies and strengthens the security of retail deposits. Valeriya Gontareva, the head of the central bank, said on July 15 that the adoption of this set of laws will facilitate a positive decision on Ukraine at the IMF Executive Board meeting that might take place on July 31, reported the Ukrainian News agency. Alexander Paraschiy: This package of legislation was not politically sensitive and therefore didn’t draw much discussion. The main delay with the bills’ approval was related to the slow processing of documents by parliament. Their adoption was necessary for a new tranche, while that might not be sufficient. In particular, the IMF stated in its July 2 press release that a positive decision on the second tranche is subject to the completion of “prior actions” (the adopted laws have filled this requirement) and that there is clarity on the sustainability of Ukraine’s public debt. This latter condition refers to completing the debt operation, as we understand it, which implies a positive decision by the IMF is possible in the end of July after tangible progress in the government’s ongoing talks with creditors. Ideally, they would produce with some type of memorandum of understanding describing the possible parameters of the debt restructuring. Besides USD 1.7 bln, a positive IMF decision gives the green light to a EUR 0.6 bln loan from the EU and funding from other Western partners.