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IMF lending will prod Ukraine to sustain reforms

Tuesday, May 9, 2017

Significance

After releasing 1 billion dollars in April, the IMF is urging Ukraine to implement land and pension reforms to make it eligible for further lending tranches. The government is finding it hard to pursue controversial changes opposed by many voters and taken up as causes by the political opposition. Gontareva's resignation reflects a lack of government support and is a setback for the reformist camp.

Impacts

  • The 'economic war' emerging alongside armed conflict in the east will dent prospects for growth and reform.
  • Failure to secure further IMF financing could accelerate the planned return to international capital markets, perhaps in the third quarter.
  • Attempts to push through reforms such as land sales may lead to increased political strife but not a full-blown political crisis.
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