New Ukrainian Finance Chief Targets May for Next IMF Cashby and
Danylyuk, appointed last week, has made loan his top priority
Other goals include mid-term budget, reforming fiscal service
Ukraine’s new finance minister said the next tranche of a delayed $17.5 billion International Monetary Fund loan could arrive as early as May.
A mission from the Washington-based lender may visit within a month, said Oleksandr Danylyuk, appointed April 14 after weeks of wrangling over a new government. Ukraine understands its IMF commitments and will implement a delayed increase in natural gas prices, while parliament will pass a corporate-governance law as early as this week, he said Monday in an interview in Kiev.
“When the mission comes, we need to fulfill all our obligations, and we’re in the process of doing so,” said Danylyuk, who’s worked in the past at McKinsey & Co. and who replaced U.S.-born Natalie Jaresko. “Regarding the tranche: as soon as we sign a new updated memorandum, then we have a board meeting and then it goes.”
Danylyuk, 40, is part of a revamped cabinet led by Prime Minister Volodymyr Hroisman that’s tasked with stepping up stalled reform efforts, particularly anti-graft measures, and restarting the IMF loan. Disbursements will probably resume in the summer, according to a Bloomberg survey of economists this month. Delays in receiving the funds prompted concern from the central bank, which warned of risks to the hryvnia and foreign reserves after the stockpile fell for the first time in almost a year in March.
While Ukraine’s currency has weakened 5.5 percent against the dollar this year, once IMF cooperation is restored “the risk for the currency will be seriously diminished,” Danylyuk said. “To get back to the IMF program is a matter of priority for me.”
While the hryvnia was little changed against the dollar Wednesday, the yield on government bonds due 2019 fell 41 basis points to 9.319 percent, the lowest since Jan. 11, data compiled by Bloomberg showed.
“The government’s task is to faithfully implement those commitments Ukraine agreed to” with the IMF, Hroisman told reporters Wednesday. He pledged that gas tariffs will be set “in an open, public and understandable way for Ukrainian society.”
Danylyuk, who arrived at the Finance Ministry from a position as President Petro Poroshenko’s deputy chief of staff, has big shoes to fill. Jaresko was popular among investors after leading a $15 billion restructuring of Ukrainian state debt last year. She was among the most reform-minded officials in the administration that took over after protests toppled Kremlin-backed leader Viktor Yanukovych in 2014.
Additional financing such as a $1 billion loan guarantee from the U.S. may also be signed “quite soon,” according to Danylyuk. Foreign donors have said the flow of funds will depend on progress in tackling graft, a scourge since communism fell 25 years ago.
“We’re talking about $3.4 billion within several months,” Danylyuk said. The $1.7 tranche from the IMF is unlocking $1.7 billion in other aid, he said.
Danylyuk said he wants to raise the standard of tax collection. Rather than making “significant” changes to rates or policy, Ukraine must “squeeze the maximum from improving administration,” he said. Danylyuk is also seeking to switch to medium-term budgeting and backs “quick and transparent privatizations,” part of a plan to boost government coffers and the efficiency of state-run enterprises.
“Given the number of challenges, I don’t expect to be loved,” he said. “But what I will do -- I’ll do everything possible to explain my position.”