IMF Fifth Review: Reform Targets Grow More Demanding

UKRAINE - In Brief 21 Oct 2024 by Dmytro Boyarchuk

---

On Friday, October 18, the IMF reported on the fifth review of the EFF arrangement for Ukraine and announced a $1.1 billion disbursement channeled to Ukraine's budget. The tone of the press release was very positive, highlighting that the authorities met all end-June quantitative performance criteria and completed four structural benchmarks. Two structural benchmarks have been extended to allow more time for reforms to be completed. My impression is that the IMF's traditionally mild structural benchmarks, outlined since Russia’s invasion, are becoming increasingly demanding. These include the requirement to appoint a new head of the Economic Security Bureau of Ukraine (ESBU) through an updated selection process involving decisive votes from international experts by the end of February 2025. Other key benchmarks include completing the reform of the Accounting Chamber, finalizing the formation of the Ukrenergo supervisory board by the end of December 2024, and appointing the head of the State Customs Service (SCS) by the end of June 2025, also based on a selection process with international expert oversight. If implemented properly, these changes could significantly disrupt large-scale political graft. Civil society groups are also calling for the State Tax Administration to be reformed similarly to the State Customs Service, with the appointment of its head being subject to the decisive role of international experts. Given Ukraine's urgent financial needs, it seems unlikely that the political elite will resist these outlined requirements. However, implementing these steps will undoubtedly become more challenging for elites who increasingly feel the risks to their entren...