Ukrainian Prime Minister Denys Shmyhal has warned that a lack of cooperation with the International Monetary Fund (IMF) would result in negative consequences for the Ukrainian economy, including the outflow of investments and currency fluctuations among other factors
KIEV (Pakistan Point News / Sputnik - 22nd April, 2020) Ukrainian Prime Minister Denys Shmyhal has warned that a lack of cooperation with the International Monetary Fund (IMF) would result in negative consequences for the Ukrainian economy, including the outflow of investments and currency fluctuations among other factors.
In March, the Ukrainian parliament passed in the first reading a bill regulating the withdrawal of insolvent banks from the market and prohibiting their return to former owners. The adoption of this law, which would make it impossible to return Ukraine's biggest private lender at one point, PrivatBank, to businessman Ihor Kolomoisky, is the main condition for obtaining a new IMF program. The document is yet to pass the second reading, but the process has been delayed for an indefinite period since the lawmakers filed a record number of edits to the bill.
Shmyhal said that the failure to adopt this law is "the only barrier" separating Kiev from the IMF's $8 billion loan program and expressed hope that Ukraine would overcome this barrier in about 7-10 days.
"The issue of the IMF money itself is not on the agenda today. We have the issue of confidence of international investors. It means that if we do not proceed with cooperation with the IMF, it will be a bad signal to everyone. This will most likely entail outflow from Ukrainian securities, entail sharp fluctuations in the foreign exchange market, the capital market and shake the banking system. We will survive this, but the question is how we will survive. And most importantly, how long the economy will be recovering," Shmyhal told RBC Ukraine in an interview published on Wednesday.
In March, Ukrainian President Volodymyr Zelenskyy said that his country was in a difficult economic situation due to the coronavirus pandemic and could face default if international partners did not provide Kiev with assistance. Ukrainian Finance Minister Serhii Marchenko, however, said that a failure to secure an $8 billion credit line from the IMF would not cause Ukraine to default but would make matters worse.
IMF Managing Director Kristalina Georgieva said in March that the fund had made good progress in talks with Kiev on providing more financial support to Ukraine. If Ukraine adopts laws to improve the bank resolution framework and laws on land reform, the new agreement will be larger than previously envisaged, she noted.
