Lagarde warned Ukraine about possible suspension of aid from the IMF

In a statement, Lagarde, quoted by Reuters, indicates the concern of the IMF the slow progress of Ukraine in improving public administration, fighting corruption and reducing the influence of vested interests on policy. She stressed that if Kiev will give a new impetus to the administrative reform and the fight against corruption, “it would be difficult to imagine how IMF-supported program will continue in the future and whether it would be successful.”

Lagarde urged the leaders of Ukraine to get the country back on the path of reform.

The statement by Lagarde occurred amid the political crisis in Ukraine that is associated with the resignation in early February the Minister of economic development of Aivaras Abromavicius. The latter explained his departure from the government’s “unwillingness to be a cover for outright corruption.” The head of the IMF at a briefing in Washington on 4 February noted that Abromavicius was responsible for a number of fundamental reforms, and his resignation means that the undertaken anti-corruption initiatives have not worked.

On the eve of a possible suspension of the assistance programme, the IMF said the Minister of Finance of Ukraine Natalia Jaresko. She stressed that there are no other organizations that could provide the country $17.5 billion and are estimated for other investors. In an interview with TV channel ICTV Jaresko suggested that “the IMF will wait until the country starts the Executive and would she be willing to work Fund.”

On the eve of the IMF technical mission has published a report with numerous recommendations to the Ukrainian government. It proposes to tighten the regime of simplified taxation, to raise the excise on strong alcohol to loosen banking secrecy, increase VAT rates to compensate for reduced unified social tax. Also, the IMF experts suggested the authorities to make an inventory of state property for its more effective use.

In mid-December the IMF has already warned Kiev about possible suspension of the loan program. Then the concern of the Fund has caused the actual failure of the deputies of the Verkhovna Rada to adopt the proposals of the government regarding the new Tax code.