IMF urges Ukraine to maintain momentum on reforms

21 Nov 16

The International Monetary Fund has told Ukraine to knuckle down on reforms in order to secure the next tranche of its $17.5bn bailout.

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Independence Square in Kiev, Ukraine

Ukraine's economy collapsed into a deep recession following a popular uprising that unfolded on sites like Independence Square in Kiev.

 

Following a visit to the country last week, Ron van Rooden, head of the IMF mission, called on the country to maintain its momentum with implementing changes, especially with regard to corruption.

“While good progress has been made, the authorities need some more time,” he stated. “Turning the current stabilisation into strong and sustainable growth will not be an easy task.”

“This has been a challenge in the past, when stop and go reforms resulted in the repeated build up of large imbalances and economic crises. The authorities should remain united in their determination to continue to advance reforms, resisting populist pressures and overcoming opposition from vested interests.”

He outlined a number of particular policies to focus on, including improving the state-owned enterprise sector and the business environment, aligning wage increases with labour productivity and maintaining a cautious monetary policy.

Efforts to reduce spending, boost revenues and ensure debt sustainability should be continued, he added, supported by pension reforms and measures to enhance the efficiency of the tax system and the quality of public spending.

“Decisive steps particularly need to be taken to fight corruption, which remains the most frequently mentioned obstacle to doing business in Ukraine,” he continued.

The country still needs to achieve “tangible results” in terms of prosecuting and convicting high-level officials found guilty of corruption and asset recovery.

Rooden did applaud Ukraine for establishing institutions like the National Anticorruption Bureau and described the launch of an asset declaration system for public officials as a “major step”.

The system, which went live earlier this month, sent shockwaves throughout the country as the extraordinary wealth of Ukraine’s political elite was laid bare.

Its launch, however, did meet one of the key conditions for IMF and European Union financial support. Ukrainian president Petro Poroshenko will meet EU leaders in Brussels on Thursday tod discuss a €600m aid package, as well as sanctions against Russia and visa-free travel for Ukrainians.

EU leaders already gave the green light to visa-free travel for Ukrainians last week. However, the system will not come into force until a new mechanism allowing the EU to suspend free travel is put in place.

EU leaders and outgoing US president Barack Obama have all also agreed to maintain sanctions against Russia for the annexation of Crimea. However, the election of US republican candidate Donald Trump, who admires Russia’s Vladimir Putin, has left Ukraine worried it may lose some protection against a hostile neighbour. 

  • Emma Rumney

    Emma is a reporter at Cooking Recipes International. She also writes for in the UK.

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