IMF expresses disapproval with Cabinet decisions reducing MinFin authority

2018/6/1 23:47:32

Analyst: “We agree with [Ukraine’s Finance Minister Oleksandr] Danyliuk on the negative risks the Cabinet's decision creates, which we identify as an enlarged budget deficit amid less-controllable public spending, higher inflationary pressure with consequent monetary policy hardening, as well as halted reforms of the fiscal service.

 


KYIV, June 1, 2018 - The IMF has sent a letter to Ukraine's Cabinet of Ministers expressing its dissatisfaction with its decisions made at a closed meeting last week that restrict the Finance Ministry's authority and remove its control of the State Fiscal Service, Concorde Capital informed its clients today based on a he liga.net news agency report on June 1, citing its anonymous sources. The letter warned that the decisions could undermine the next IMF loan tranche, the epravda.com.ua news site reported.

 

One of the resolutions, yet to be published, removes MinFin from the list of state bodies required to approve the government's financial documents. The other Cabinet resolution, removing control of the State Fiscal Service from the Finance Ministry, was approved in violation of government procedures and is illegal, Ukraine’s Finance Minister Oleksandr Danyliuk told a meeting with Ukrainian business leaders on May 31.

 

The Cabinet’s decision to concentrate “so much power in one set of hands, especially before elections, is not right, he said, adding that he believes that this decision will not be published and become official.  This conflict should serve to boost efforts to reform the State Fiscal Service, implying that the Cabinet’s attempt to take control of the state's leading tax authority is aimed at undermining reform.

 

Concorde analyst Evgeniya Akhtyrko added: “We believe this conflict will be smoothened out, as already demonstrated by the Cabinet's response in denying ever approving such resolutions. (Danyliuk said MinFin received copies of the resolutions, epravda.com.ua reported). We agree with Danyliuk on the negative risks the Cabinet's decision creates, which we identify as an enlarged budget deficit amid less-controllable public spending, higher inflationary pressure with consequent monetary policy hardening, as well as halted reforms of the fiscal service.

 

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

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