Tentative IMF deal struck, as presidential popularity tumbles, and recovery wanes

UKRAINE - Report 01 Nov 2021 by Vladimir Dubrovskiy and Dmytro Boyarchuk

Autumn is traditionally intense in Ukraine, and this year is no exception. A staff-level agreement with the IMF, the Pandora Papers, the replacement of the speaker, the president’s falling ratings, and a new, more virulent wave of COVID-19 are only the most important issues.

Two long-awaited events were a staff-level agreement with the IMF, and an extension of the ongoing SBA program with Ukraine to June 2022. The news was encouraging for markets, but the IMF made it clear that its review is conditional upon Ukraine doing some homework. Critical conditions include passing the 2022 budget, selecting an independent anti-corruption prosecutor, and further progress in the reboot of the High Council of Justice. Yet the IMF has dropped its demands that gas rates be raised to market levels for now, as energy prices skyrocket globally.

The Pandora Papers scandal blew up in Western media, but at home, news about President Volodymyr Zelenskiy hiding millions of dollars offshore was not especially killing for Ukrainian audiences. This scandal was, of course, treated mostly negatively, but Zelenskiy’s hardcore supporters maintain that that president made his fortune legally, and that hiding money in tax havens is a common practice, even in countries with a supposedly strong rule of law. The silence of top TV channels on this subject also helped to ease the impact.

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