David Lipton, IMF: Ukraine risks reversing

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Friday, 15 September 2017, 16:43

Ukraine has never been so far - over the past two years, the country has received four tranches of lending 8.7 billion dollars total from the IMF.

From 1994 to 2013, Ukraine participated in five programs of an international creditor, but none was completed. Each time Ukrainian authorities received several tranches in the beginning, and it all ended, because the authorities did not want or were not able to fulfill their obligations.

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Despite some delays in providing funds, the latest Extended Funding Program (EFF) is still operational. However, the next - the fifth tranche - Ukraine risks not getting.

Key issues are pension reform, steps to accelerate privatization, concrete results in the fight against corruption. Only after completing this "homework", government will be able to rely on the next tranche of the Fund.

In general, there are great doubts whether the current authorities need cooperation with an international creditor. Two years ago, when this program only started to work, the country was in a difficult situation: the war, the rapid drop in GDP, devaluation of the hryvnia and high inflation. The situation is now stabilizing, and the exit from the program does not seem so risky.

Can Ukraine count on the next tranche, what is important for the IMF now, and what is wrong with the Ukrainian reforms – those are the matters the UP have discussed with the IMF's first deputy chairman David Lipton, who came to Ukraine with an important mission.

What brings you to Ukraine this time?

— The reason for my visit now is to get an update on the economic situation in Ukraine and the progress of reforms. I came at the time when we are preparing the next World Economic Outlook – our fresh assessment of the global economy, which is very relevant for Ukraine.

We also discussed the progress of reform program, supported by the IMF. There have been some delays in this program. At the same time, it's a critical moment for Ukraine to move forward with the reform agenda.

What can you say about World Economic Outlook? I know it will be announced in October, but can you tell us more now? What is the projection of economic growth?

—  The global economy is strengthening, and recovery is gathering momentum. And this recovery is becoming very broad-based. Most advanced economies and most emerging market countries are in recovery. Europe is also recovering.

All of that creates an opportunity for countries around the world to lift each other's economies and to  take advantage of stronger demand. But this recovery is not only led by consumption, but also investment, which is very trade and import intensive. It's for the first time since the global financial crisis that we see investment growing faster than GDP in the world.

All of that creates an opportunity for countries to export more and to increase growth further. Countries around the world are going to be judged in the future by how they too0

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