Ukraine's updated memorandum with IMF contains 12 new structural benchmarks - Rada committee deputy head

MOSCOW. Dec 12 (Interfax) - The memorandum on financial and economic policy updated under the second review of the Extended Fund Facility Arrangement (EFF) with the International Monetary Fund (IMF) has 12 new structural benchmarks, among them, the reset of the Economic Security Bureau (ESB) by the end of June 2024, Verkhovna Rada Committee on Finance, Tax and Customs Policy First Deputy Chairman Yaroslav Zheleznyak said.

"Only one condition has been added for the short term, until February 2024: to find sources to increase own revenue in the 2024 budget by at least 0.5% of GDP if necessary. This is a surplus of approximately UAH 38 billion," Ukrainian media quoted him as saying on social media.

This is imperative to amend the procedural code regarding the consideration of cases in the first-instance courts by one anti-corruption judge or by a panel of three anti-corruption judges by the end of March, the lawmaker said.

Along with resetting ESB, an external audit of the financial situation of the district heating companies, separation of debts before and after February 2022, should be undertaken by the end of June.

"By the end of July: to conduct an audit of tax benefits and losses for the design of the reform, to enact a law that will launch a new court to consider administrative cases against state authorities (National Bank of Ukraine (NBU), National Anti-Corruption Bureau of Ukraine (NABU), Ukraine's National Agency on Corruption Prevention (NAPK))," Zheleznyak said, identifying named two more benchmarks.

The updated program also envisions elaborating a policy of state ownership of state-owned companies, a dividend policy and a privatization strategy by the end of August, and identifying the state-owned companies most affected by the crisis and assessing fiscal and quasi-fiscal risks, as well as completing an external audit of the NABU's efficiency involving three independent experts with international experience and publishing its report by the end of September, he added.

Additionally, the process of drafting the medium-term budget should be reviewed by the end of October in order to bolster the strategic approach to the budget, and a government resolution containing an action plan and timeline that will establish a clear link between medium-term budget planning and capital spending, as well as designating the Finance Ministry as being responsible for supervision, should be adopted by the end of 2024.

"And one permanent structural benchmark has been added that all majority state-owned banks remain under the Finance Ministry's management. All nationalized non-system banks should be transferred to the Deposit Guarantee Fund," Zheleznyak said.

Among the benchmarks that were included in the program, the deadline for the update of the 5-7-9 loan program was moved to the end of March 2024, and the benchmark for the rehabilitation of the banking sector was pushed back from the end of March to the end of December 2024, he added.

"Overall, the situation for all 35 structural benchmarks is as follows: 13 were fulfilled on time, four were implemented with deadlines disrupted, two were postponed, four are in progress, 12 are new," the lawmaker said.

The four-year EFF Arrangement was approved on March 31 this year, with the first disbursement of $2.7 billion allocated in early April and the second disbursement of SDR664 million ($890 million at the then exchange rate) in early July. The program's planned schedule envisioned the allocation of two more such disbursements to Ukraine in mid-October this year and at the end of February next year, based on the results of the second and third reviews, when the fulfillment of obligations is assessed as of the end of June and December this year, respectively. The third disbursement of $881 million at the current exchange rate is expected to be channeled in the coming days.

Three more disbursements are scheduled for 2024: SDR1.670 billion ($2.216 billion) in mid-June, followed by SDR835 million ($1.108 million) each in early September and December.

Two disbursements are scheduled for 2025: SDR684 million ($908 million) in early March and late August, followed by three more final tranches of SDR966 million ($1.28 billion).