Yet again Kiev goes boldly where no idiot has gone before in provoking the International Monetary Fund (IMF) by intentionally not delivering pension reform as promised by PM Groysman. With billions of dollars at stake, one of the last great giveaways and corruption opportunities is slipping through Kiev’s hands as the clock ticks.
The International Monetary Fund did not approve the pension reforms prepared by the Cabinet of Ministers, as reported by New Ukraine news outlet, citing a source in the Poroshenko government. This is grounds for the IMF to deny further funding to Kiev.
The IMF mission was in Kiev from the 16th to the 26th of May. In a statement on the results of their work, the fund’s experts noted that it is necessary to continue technical work on the pension and land reforms or there will be no further free money from the IMF.
It has been reported that the Fund has categorically opposed the ban on the taxation of pensions for working pensioners and did not support the idea of reindexing pensions on an ongoing basis. In addition, the IMF categorically opposed the Ukrainian government’s plans to reduce the index used in estimating the worth of a year of work in the formula for calculating pensions from 1.35 to 1.
According to the agency, the pension reform project assumes that the index will decline as early as 2018. This will lead to a significant reduction in pensions. The agency notes that the initiative to reduce the index used to estimate the worth of a year of work in the formula for calculating pensions was not reflected in the presentation by the Cabinet on pension reform. The full text of the draft bill, which was provisionally approved by the government, has not been made public yet.
New Ukraine states, the IMF is ready to make concessions to Ukraine and extend the deadline for the adoption of pension and land reform. To allocate the next tranche, the Fund will be satisfied with the adoption of the draft laws in the first reading, and not as a whole, which was required earlier. This is not what the IMF is saying in other interviews.
Speaking yesterday at the conclusion of a visit to Ukraine, Ron van Rooden, who leads the IMF’s work with the country, stressed again the importance of the “decisive implementation” of reforms, namely on pensions, land and anti-corruption.
Reform to Ukraine’s pension system, which van Rooden has previously pointed out is draining the public finances, is highly controversial, and the Rada rejected draft land reform proposals by 226 votes to 17 earlier this month.
This would pave the way for Ukraine to receive the next tranche of money under the program, with the IMF expected to disburse a further $4.6bn this year, on top of $1bn already delivered in March.
While the country has already made minor progress on measures to combat corruption, which previously seemed so hard to achieve the IMF threatened to cancel its Ukrainian funding program – it still has some way to go, and faces hefty resistance from within.
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