IMF team arrives in Ukraine to check on new government

KIEV: An International Monetary Fund team arrived in Kiev on Tuesday after the formation of a new Ukrainian government resolved a prolonged political crisis that had stalled the release of vital aid.
The mission's visit was long awaited in the cash-strapped former Soviet country as it grapples with the costs of a two-year conflict in the pro-Russian separatist east and attempts to dig out of a dramatic economic swoon.
The Fund approved a new US$17.5 billion (RM70.34 billion) loan programme in March 2015 that included an initial lump payment of US$5 billion and provided for the subsequent release of US$1.7 billion every three months.
But Ukraine has so far only received US$6.7 billion and seen no new disbursements since the second half of last year.
The IMF has been frustrated by the slow adoption of painful belt-tightening measures that were being resisted by populist parties and damaged the approval ratings of leaders who rose to power in the wake of Ukraine's February 2014 pro-EU revolt.
Political mayhem spurred by allegations of state-level corruption and the influence of powerful tycoons over key decisions and appointments also put the breaks on the resumption of lending.
That conflict was settled when prime minister Arseniy Yatsenyuk submitted his resignation and was replaced by Volodymyr Groysman in April.
The protege of pro-Western President Petro Poroshenko has since vowed to keep strictly to the measures prescribed by the IMF.
Groysman last month crucially met one of the Fund's key demands by pushing through parliament legislation that nearly doubled average household gas tariffs – an unpopular reversal of the Soviet-era practise of spending vast sums on state subsidies.
But the government overhaul also cost US-born finance minister Natalie Jaresko her job.
The former State Department worker and private banker was highly regarded in Western financial circles and seen as a key interlocutor in talks with the Fund.
Her replacement Oleksandr Danylyuk, a relatively unknown figure outside Ukraine, previously served as the deputy head of Poroshenko's administration.
The Fund said in a statement issued before the team's arrival that the "mission will continue policy discussions with the Ukrainian authorities" but gave no hint about the possible release of further aid.
Deputy Prime Minister Stepan Kubiv said last month that he expected the Fund to approve a new tranche payment by June.
A resumption of IMF lending would also trigger the release of billions of dollars of other foreign aid.
The IMF last month lowered Ukraine's 2016 economic growth forecast to 1.5% from 2.0%.
Ukraine's economy shrank by 9.9% last year and 6.8% in 2014. — AFP