Stand-By instead of Extended Fund Facility: anything wrong?

UKRAINE - In Brief 08 May 2020 by Dmytro Boyarchuk
Ukrainian media reported ‘Breaking News’ yesterday. The IMF does not discuss 3-year Extended Fund Facility program for Ukraine anymore and proposed instead an 18-month Stand-By arrangement. Reporters cited Gerry Rice, Director of the Communications Department at the IMF, who mentioned this at press briefing. In particular, he said “given the unprecedented uncertainty surrounding the economic and financial outlook, and the need to focus policy priorities on near term containment and stabilization, negotiations have shifted to this 18-month Stand-by arrangement”. Also he added “then when a recovery is in place, the focus could shift back to addressing Ukraine’s longer term structural reform needs to foster stronger and more inclusive growth”. Journalists and many opinion-makers treated this point as a negative signal of potential problems with the IMF funding. But MinFin reacted promptly claiming that the size of funding remains unchanged. It looks like Ukrainian media have over-reacted to this news. For sure, structural reforms are moving very slowly and we still are awaiting final approval of ‘anti-Kolomoyskiy’ law. But we did not see any intention from Ukrainian authorities to drop on their commitments. On the contrary, the authorities stepped back on their intention to dismiss the Head of the NABU after they received a warning signal from the Fund. The change of the format most likely stems from intention to close the deal ASAP. Kolomoyskiy is resisting desperately and no guarantees he invents more impediments after ‘anti-Kolomoyskiy’ law voted in. Meanwhile COVID-19 crisis is unfolding and Ukrainian authorities need funding to cover extra budget spending. So it look...

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