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The IMF says “No” to Ukraine – as long predicted it would

December 1, 2016

The IMF in very plain words has refused Ukraine the next allocated tranche of $1.3 billion.  The February $2 billion tranche naturally gets kicked further into the future.

This should come as no surprise whatsoever.

In February, April, June and most recently (and at length) in October, the blog has repeatedly written (and stated at closed door forums) that IMF cooperation would be indefinitely suspended due to the fact that Ukraine would no longer be desperate for the money and therefore the motivation of parliamentarians and implementing institutions alike would simply disappear – until such time as the situation becomes so acute that they are once again forced to act.

“…….meeting the November 2016 and the $1.3 billion IMF tranche requirements appears optimistic, then meeting the obligations for the scheduled February 2017 tranche of $2 billion is perhaps as remote as riding a unicorn naked through the centre of Kyiv without once being snapped by a smartphone.”

A told you so statement – and the long list of issues in the above-linked October entry remain to be solved as do the repercussions it outlines.

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Though the above entry makes forecast of 2017 IMF related issues, it wisely steers clear of any prophecy regarding a return by Ukrainian to its obligations under the IMF agreement – and thus a return to IMF funding.

It is thus time to be foolish and/or reckless and forecast just how long it will before before the Ukrainian situation becomes once again so dire that parliamentarians and implementing institutions are forced to put their ingrained fecklessness to one side and act with the integrity expected of them – but of which they are consistently absent unless truly without any other options.

Short of something akin to force majeure coming from either The Kremlin or Washington DC dramatically changing the environment within which Ukraine finds itself, there is no urgency to address Ukrainian obligations to the IMF in 2017.

(The only other “incentive” would perhaps be the “Firtashisation” – or privately conveyed possibilities thereof – to powerful and influential Ukrainian figures that nefariously control Verkhovna Rada votes and who have “strayed” within the laws of European nations.)

Certainly nothing approaching obligation compliance will begin before Spring 2017 – the constituency will first be allowed to emerge from a winter under radically increased utility pricing and the application of soothing subsidies – which lends to the ability of the current government and majority coalition to survive the increasingly cacophonous noise relating to early Verkhovna Rada elections.

Realistically (in the current environment) it seems highly unlikely that Ukraine will make any great strides toward getting the IMF agreements back on track until Autumn 2017 at the earliest – if at all in 2017.

Thus predictions for the IMF-Ukraine lending agreement to recommence?

Perhaps 2018.

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