The Ukrainian government tranche from the IMF waiting for since January. The Fund promised to hold a meeting in Ukraine only after the update of the Memorandum of cooperation. It is expected that the terms of the document are the points about raising the retirement age and the opening of the land market.
“Most likely the organization will be more pragmatic and will continue to maintain their dependence on the major shareholder of the IMF (the U.S. – ed.). And the international monetary Fund is unusual in a democratic organization where one country – one vote. In the IMF voting weight of a country depends on its share capital of the Fund, and the U.S. share of 16.5%. The package of 15% gives the ability to block any decision”, – says acting Director of the International Fund blazer Oleg Ustenko.
If the international monetary Fund decides to suspend cooperation with Ukraine, the country will have to Deplete foreign exchange reserves.
“If the IMF withholds tranche, the country will have to take the money from the gold and foreign exchange reserve, which now stands at 15.5 billion dollars – $ 4 billion – a net reserve of the rest of the IMF money. Ukraine will be able to take those $ 4 billion, but it is only delaying a major crisis. Then you will have to enter foreign markets with loans, at high interest rates,” he adds.
The head of the Committee of economists of Ukraine Andriy Novak believes that the more it’s about the continuation of cooperation with the IMF, because it depend on the financial ratings of the country and cooperation with other creditors and investors.
“This tranche depends on the cooperation with other European partners – the EBRD, the European investment Bank – they’re all watching the actions of the IMF. If the cooperation and the Foundation will continue, they will be calmer to work with us. Failure to provide tranche will cut Ukraine into the financial ratings and bring us closer to a potential default,” says Novak.
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The international monetary Fund has opened a four-year program of financial support to Ukraine in 2015 by 17.25 billion. After the first tranche of $ 5 billion, Ukraine received with a slight delay the second tranche of 1.7 billion dollars in early August 2015, and then there was a long pause because of the failure of a number of conditions, as well as political crisis and change of government.
After the arrival of the new Cabinet, headed by Volodymyr Groisman (in April 2016) the negotiations on the continuation of funding resumed, however, the IMF decided to allocate the third tranche of $ 1 billion only in mid-September. Under the new schedule, Finance, further loans planned on a quarterly basis, the results of the performance criteria.