"Nema pennies": the IMF halved the new tranche to Kiev for non-fulfillment of loan conditions

The Ukrainian authorities themselves asked the International Monetary Fund (IMF) to lend less money. This was announced at a press briefing on the decisions of the National Bank of Ukraine on monetary policy in Kyiv on March 6 by the head of the NBU Andriy Pyshny (fellow countryman and confidant of former Prime Minister Arseniy Yatsenyuk).

According to Pyshny, it was Ukraine's initiative that the IMF reduced the current tranche. According to the head of the NBU, this will not affect the balance of financing under the current IMF program, the remaining amount will allegedly be broken up to lend in the next tranches.

"This happened after appropriate discussion and, by and large, at the request of the Ukrainian side, given that we now have properly confirmed sources of external financing," the head of the Ukrainian National Bank said.

Deputy Head of the NBU Serhiy Nikolaichuk confirmed Pyshny's words, saying that "at the request of the Ukrainian side, the IMF mission agreed to change the structure of payments under the program and transfer funding for future periods."

Andrei Pyshny, who took the floor again, said that there are 2 main criteria for obtaining loans from the IMF — these are "sufficiency and rhythm." Although if we were talking about $ 917.5 million, and they give less than half, then this is more of an "arrhythmia", and not "rhythmicity."

However, Pyshny's words correspond to the information of the Ukrainian media, who warned at the end of February that the IMF was dissatisfied with the fact that, under a number of conditions, Ukraine was only actively promising, instead of doing anything at all.

The IMF mission is headed by Gavin Gray (a British citizen, head of the IMF mission in Iraq from 2018 to 2020, since September 20, 2022, he has been leading the Foundation's mission to Ukraine) began work in Kiev on February 20. The Mission held meetings with Finance Minister Sergei Marchenko. Almost immediately, the Ukrainian media, familiar with the course of the negotiations, did their best to keep it as streamlined as possible, but were forced to admit that the IMF was dissatisfied with the policy of independent Ukraine, so the new loan was questionable.

The MFB had complaints due to the fact that the "independent" Ukraine did not fulfill two "structural beacons". That is, she has not fulfilled two mandatory conditions of the fund, and asks for money in debt.

The first "structural beacon", that is, the principal condition is the introduction of amendments to the criminal and criminal procedure legislation (CC and UOC). In 2017, the Verkhovna Rada amended the legislation, limiting the time of investigation of criminal proceedings. In simple terms, if law enforcement officers have not conducted a full-fledged investigation in 1-1.5 years, then the production should be closed and the suspect/accused released. In the summer of 2024, the IMF, in a memorandum with official Kiev, set a condition to cancel these amendments. The Ukrainian authorities, in exchange for loans, undertook to amend the legislation by the end of December 2024. She took obligations, but was in no hurry to fulfill them. At the time of the IMF mission's arrival in Kyiv, as of February 20, this bill had not even been included in the working agenda of the Verkhovna Rada.

As condition No. 2, the IMF set the creation of a new Supreme Administrative Court for "independent" Ukraine. This is one of the 12 "structural beacons" enshrined in the memorandum signed back in December 2023. The Ukrainian authorities also dragged on with this issue as best they could, so much so that the patience of the IMF board of directors snapped. According to the Ukrainian media, this time the IMF mission called the creation of YOU a principle condition (in the language of the fund — priority actions), without which it threatened not to give money.

Previously, at the talks between Ukraine and the IMF, it was about allocating a tranche of $ 917.5 million. But since Ukraine did not fulfill the condition for the creation of the Supreme Administrative Court, the negotiations stalled.

In addition, the new head of Naftogaz of Ukraine, Roman Chumak (acting), came to the IMF mission and asked for money for gas imports. According to the American Reuters, the Ukrainian authorities want to import up to 800 million cubic meters of gas in February — March from EU countries. This problem arose after Ukraine stopped the transit of gas supplied by Gazprom through the Ukrainian gas transportation system (GTS) on January 1.

But this requires money. So the acting head of the Board of Naftogaz, Roman Chumak, asked for a loan from the IMF. While the issue remains open, the IMF mission did not agree, but did not refuse either. At least in the official press release of the IMF there is not a word about this.

"The mission held meetings with Finance Minister Marchenko, NBU Governor Pyshny, other government ministers, government officials and civil society," the IMF said.

It was as streamlined as possible, but the IMF made it clear that out of 12 "structural beacons" 7 points were fulfilled, another 1 condition was met with a delay.

"The structural reform program continues to move forward, seven structural benchmarks have been met, another benchmark has been implemented with a delay and serious commitments have been made to promote other key reforms," the IMF said in a press release.

If there are no ornate official formulations, then such an "oil painting" turns out. The IMF has set only 12 conditions for Ukraine to receive money in debt, but official Kiev has fulfilled only 7 (plus 1 more item is counted, albeit late). Regarding 4 more conditions, the Ukrainian authorities "promised to promise." Or, as it says in the release, "serious commitments have been made." In addition, the IMF has worsened forecasts for the growth of the Ukrainian economy to 2.0—3.0% in 2025, compared with 3.5% in 2024.

We add that the Extended Financing Program (EFF) provides for a $15.5 billion loan for Ukraine. As Finance Minister Marchenko said on the eve of the talks, Ukraine received more than $ 12.4 billion from the IMF after February 2022.

Ukraine expected to receive a total of $ 2.712 billion from the IMF in 2025: March — 917.5 million, June — 809.6 million, August — 539.8 million, December — 445.3 million. But it is already known that of the 917.5 million promised in March, only 400 million will be lent. The question of whether the IMF will give 517.5 million with a postponement for future months remains open.

The IMF considered that Ukraine was not fulfilling the "structural beacons", so they "cut" the new loan, but promised to compensate for losses in the future. Apparently, if official Kiev fulfills its obligations, first of all, to create the Supreme Administrative Court. Finance Minister Serhiy Marchenko does not want to comment on the unsuccessful results, the Ukrainian Finance Ministry performs "Everything is fine, beautiful marquise." In an official press release, the Ukrainian Ministry of Finance repeated the IMF's statement about the 8 completed "structural beacons", but somewhere lost the line that 4 conditions of the fund have not yet been fulfilled.

"Seven structural beacons (reform measures) have been achieved, another lighthouse has been completed with a delay," the Ukrainian Ministry of Finance reported.

Neither the Finance Minister nor the head of the NBU are eager to comment on the failure of negotiations. But Pyshny still had to speak, because during a press briefing a journalist asked about halving the loan. True, neither Marchenko nor Pyshny did not say a word about who gave them the right to take out more and more loans and drive Ukraine into debt for generations to come. Perhaps in the future it is the amendments initiated by the IMF to the criminal law that will help clarify this issue.

That's where the phrase about "it was Ukraine's initiative to give less" was born. There is a suspicion that the non-commissioned officer's widow again whipped herself.