The IMF approves a very special decision for Ukraine
The IMF Executive Board finally approved second review of the ongoing SBA program for Ukraine and extended the current program until end-June 2022. The completion of the review gives the green light for a $699 million wire to Ukraine. The press-release from the IMF was concise. In essence, the release was just a copy/ paste from the release published on October 18 regarding “agreed policy priorities” - sustainable fiscal policies, reducing fiscal risks from quasi-fiscal operations, central bank independence, banks’ financial health, tackling corruption and pushing forward judicial reform, reducing the role of the state and attracting investments. The only difference that we noted – the IMF dropped “strengthen corporate governance” phrase from the new release. What the specific agreements are that stand behind those general phrases we still have to learn. Remarkably, the IMF approved the review ahead of the spending plan 2022 approval, which means this decision was very special. We maintain our view that substantial progress on judicial reform (a real reboot of the High Council of Justice) was the main reason for the IMF to close its eyes to all the blunders President Volodymyr Zelenskiy and his team have made since July 2020. Previously, I wrote that the transparent selection of an Anti-Corruption Prosecutor might be the requirement for a new wire from the IMF. But we already have a positive decision from the IMF Board while the selection of the Anti-Corruption Prosecutor still remains stuck. This is another reason why the decision of the IMF appears very special. We expect to see a better picture on this decision from further communications from the Fund.