You're reading: IMF says Ukraine needs prudent policies and strong banks

IMF statement gave no clue about whether Kyiv was doing enough to unlock new cash

AN lang=EN-GB style=”FONT-SIZE: 10pt; mso-ansi-language: EN-GB”>WASHINGTON, August 3 – The International Monetary Fund on Thursday urged Ukraine to press on with “prudent” tax and monetary policies, but a brief IMF statement gave no clues about whether Kyiv was doing enough to unlock new cash.

The statement, released after a meeting between IMF Managing Director Horst Koehler and a Ukrainian delegation led by deputy premier Yury Yekhanurov, said Ukraine needed a strong banking sector and stepped-up structural reforms.

“The Managing Director…encouraged them to implement a strong reform programme, which is important for a lasting recovery of the economy and an improvement in standards of living in Ukraine,” a spokeswoman said.

“The Managing Director noted that continued prudent monetary and fiscal policies, coupled with strengthened financial sector and structural reforms, are central to achieving these ends.”

The Ukrainian delegation wants the IMF to resume disbursements from a $2.6 billion IMF credit because renewed IMF lending could open the door to debt rescheduling and credits from other sources.

But the IMF has long been concerned about the slow pace of Ukrainian reforms and it wants more details on a presidential decree boosting state control over the grain market.

The fund also needs to work out how to respond to an independent audit which says Ukraine misreported reserve levels in previous years, encouraging the global lender to hand over money which might otherwise have been withheld. But the audit found no evidence that Ukraine had misused money from the IMF.

Ukraine currently owes the IMF some $2.26 billion from a series of different loans extended over the last decade.