Delayed Tranche of the IMF: Ukraine’s Approaching Elections

Last weekend showed that Ukraine is approaching a new point of aggravation. Yesterday the Deputy Minister of Finance Vasily Shkuratov reported that the next tranche from the IMF in the amount of $ 500 million will come later in Ukraine, there will be no support until the end of March.   Against this background, Petro Poroshenko, known as the ‘President of the war’, tweeted about the desire to “return the Crimea and Donbas peacefully”. Alexey SHARSKY, RTA: Delayed tranche of the IMF for Ukraine is a noticeable signal of international structures to the government of Petro Poroshenko. Do not overestimate the significance of this event: we are not talking about any fundamental change in the Fund’s position on Ukraine, and sooner or later the money will come to Kyiv. The IMF has long been engaged in dialogue with Ukrainian politicians on very pragmatic terms, and the Fund’s requirements are becoming tougher from year to year. Now we are witnessing the next stage of crack-down on Kyiv, which in general was expected. From 5 to 13 March in Kyiv, the technical mission of the Fund assessed the performance of Ukraine’s obligations to international donors. The media among the most important issues of negotiations with the mission of the Fund called the price of gas for Ukraine, and presidential candidate Yulia Tymoshenko promised after her victory to review the terms of cooperation and convince the IMF to give money without increasing the cost of blue fuel. At the same time, according to the National Bank of Ukraine, the cornerstone of the March talks was the repeal by the Constitutional Court of the article on illegal enrichment of officials. Interestingly, Transparency International has previously argued that the repeal of the article of the Criminal Code on illegal enrichment could threaten the visa-free regime with the EU and financial assistance from the IMF. Kyiv, however, does not see a threat. “Most of the conditions that must be met by the end of March, today are met or are in the process and must be met in the near future,” said the Head of the Ukrainian Ministry of Finance Oksana Markarova. However, there is no money in March. The time and context in which the IMF decided to ‘hold half a billion dollars is the most important thing to understand in this situation. It is known that cooperation with the International Monetary Fund is one of the ‘trump cards’ of Petro Poroshenko. The President uses regular IMF tranches to patch budget holes and prevent a social explosion. The very fact of international assistance Poroshenko presents as the success of his team and proof of the imminent bright European future of Ukraine. If there is no IMF money in March, Poroshenko will lose a fundamentally important opportunity for him to urgently high up his rating on the eve of the vote. So the ‘slowness’ of the IMF and the ostentatious independence of the Fund from the nitty-gritty of Ukraine’s politics is quite political in nature. Apparently, international partners refuse to play along with the current government and do not want to help Poroshenko to be re-elected. A similar tactic of demonstrative non-interference has already been used by Western structures in neighboring Moldova in the parliamentary elections. Since 2018, the EU has blocked macro-financial assistance to Moldova because of the democratic reforms stalling in the country. Simply put, Brussels stopped financial support for the ruling regime, hoping thus to put pressure on the government of oligarch Plahotniuc and prevent him from rigging the elections. The EU representatives in Moldova explicitly stated that the resumption of assistance will depend on the results of the vote, and so far there is no clarity on the position of Brussels after the elections. Observing the example of Moldova and realizing the enormous risks for himself, Petro Poroshenko even tried to urgently break into the media and said in social networks that he was ready to return the Crimea and Donbas peacefully. Amid a serious worsening of relations Poroshenko with the veterans of the Kyiv’s anti-terrorist operation in Donetsk and Lugansk this statement looks like too adventurous trying to ‘shuffle cards’ before the election. A certain nervousness of the incumbent President, apparently, only intensified against the backdrop of the delay in the IMF tranche and growing popularity of competitors. Things are coming to a head, its approach does not offer the current Kyiv leadership optimistic scenarios – the Poroshenko’s team, and Brussels, and the IMF leadership understand it well.