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IMF says it may freeze aid to Ukraine if Kiev does not comply with requirements

December 18, 2015, 15:25 UTC+3 KIEV
In particular, the budget of Ukraine should be approved in compliance with the requirements of the IMF, its first deputy director David Lipton says
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© Mikhail Palinchak/Ukrainian president's press service/TASS

KIEV, December 18. /TASS/. The IMF may freeze the Western financial assistance to Ukraine if the Ukrainian government acts not in compliance with the fund’s requirements, according to a statement made by IMF's first deputy director David Lipton on Friday.

In particular, the budget of Ukraine should be approved in compliance with the requirements of the IMF, Lipton said.

He stressed that the IMF is concerned about the discussions in the Ukrainian parliament, which effectively rejected the government proposal for a new tax code and the draft budget for 2016.

Ukraine will have to cut social spending if it wants to continue receiving assistance from the IMF, Pavel Nefidov, director of the Financial and Banking Council of CIS said in an interview with TASS.

"The IMF has a standard procedure of interaction with the countries which receive loans under the programs it supervises. It sets a roadmap where the most sensitive issue is the reduction of social spending. When the program for Ukraine was signed and launched the discussion of many issues was postponed to a later period after the elections. The elections to the regional authorities in Ukraine were held, and the lender returned to the agenda, which implied optimization of the budget," Nefidov said.

Konstantin Bondarenko, head of the Institute of Ukrainian politics, said that Ukraine will have to comply fully with the requirements of the IMF.

"In April 2014, the government of Yatsenyuk announced that it would meet all the requirements of the IMF, making the Ukrainian economy absolutely dependent on the requirements of the fund. Today, the IMF is taking fairly draconian measures against the Ukraine. The terms of loans are very tough. But that is the choice that was made by the government and breaking relations with the IMF would mean even greater losses for the Ukrainian economy, than to be under the fund’s thumb," Bondarenko said.

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