EU drafts EUR 1 bln macro-financial assistance program for Ukraine

2018/3/12 23:31:36

Analyst: “So far, our base-case scenario is that Ukraine will get this year both the next IMF tranche and the first tranche under the MFA IV program.”

 


BRUSSELS, Mar 12, 2018: The European Commission adopted on March 9 a proposal for a fourth Macro-Financial Assistance program for Ukraine, the commission’s website reported the same day. The new MFA IV program assumes two loan tranches of EUR 500 mln each to be disbursed in 2H18 and 1H19 (but no later than in 2.5 years since the program’s inception). The proposal is subject to the approval of the European Parliament and the EU Council.

 

Ukraine already received EUR 2.81 bln under the previous three MFA programs with the EU in 2014-17. Under the third program, it received only two (EUR 1.2 bln total) of the planned three (EUR 1.8 bln total) tranches as Ukraine failed to fulfill all the EU requirements to get the last tranche before the program was terminated in January 2018. In particular, Ukraine fulfilled 17 of the 21 policy commitments before the program expired (and later on fulfilled one more).

 

The EU Commission said the new program will “reflect” the three unfulfilled measures under MFA III. In particular, the EU expects that a) an automated verification system of e-declarations in Ukraine will be introduced, b) some progress will be reached in verification of data on the beneficial owners of the companies, and c) a solution will be found on a wood export ban introduced by the Ukrainian parliament. The program will also include some other policy measures in the area of public finance.

 

“Delivering on key anti-corruption and governance reforms will be indispensable if the MFA operation is to be successfully completed,” according to the commission’s proposal document. It also stresses that the new tranches will be “conditional on satisfactory reviews under the IMF program and the continued drawing by Ukraine on IMF funds.”

 

Alexander Paraschiy: “The size of the new MFA program is slightly smaller than we expected (two or more tranches of EUR 600 mln each), but the proposal in itself is a big positive for Ukraine. As we expected, the EU clearly links the new MFA program to Ukraine’s progress with the fourth review of the IMF’s Extended Fund Facility program. So MFA IV won't be approved if Ukraine fails to agree upon legislation with the IMF on the independent anti-corruption court. So far, our base-case scenario is that Ukraine will get this year both the next IMF tranche and the first tranche under the MFA IV program.”

 

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For more information, link here: www.concorde.ua

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