The International Monetary Fund mission has completed its work in Kyiv on the fifth review of the Extended Fund Facility (EFF) program with Ukraine. The National Bank reported that IMF representatives and the Ukrainian authorities had reached a Staff-Level Agreement (SLA), while the Government of Ukraine emphasized that our country had fulfilled all the structural benchmarks and criteria for receiving the next loan tranche. However, neither the National Bank nor the Cabinet of Ministers mentioned that at least the condition of developing a transparent competition procedure for the position of the managing director of the Deposit Guarantee Fund has not yet been fulfilled, UNN writes .
Ukraine's Prime Minister Denys Shmyhal said on Wednesday that Ukraine and the IMF had reached an agreement at the expert level on the fifth review of the $15.6 billion Extended Fund Facility (EFF) program. This was the first IMF mission to fully operate in Kyiv during the full-scale invasion.
"All the quantitative criteria and structural milestones were met by the end of June," - Shmyhal emphasized. He added that these agreements demonstrate that Ukraine continues to implement important reforms and that international partners support the country on this path.
The National Bank reportedthat according to the Fund's forecast, in the second half of 2024, economic growth in Ukraine will slow down due to the consequences of Russian attacks on energy infrastructure, the impact of the war on the labor market and the level of business activity expectations. The forecast for real GDP growth in 2024 is 3%, and inflation is expected to reach 9%. The Fund forecasts economic growth in 2025 at 2.5-3.5%, but the risks of the forecast are extremely high.
At the same time, the Fund emphasized that solving the problem of electricity shortages on the eve of winter is critical and requires coordinated efforts, including with the participation of international partners.
The IMF also noted the stability and liquidity of the financial sector and the rapid pace of reforms, despite the difficulties of martial law. To preserve financial stability and increase preparedness for potential shocks, strengthening the system of bank resolution, contingency planning, and bank governance is a priority,
Despite the IMF's emphasis on strengthening the banking sector and the need to prepare for challenges, an important gap in this area remains unaddressed. We are talking about the work of the Deposit Guarantee Fund. After all, the healthy and efficient functioning of the banking sector is impossible without the Fund's high-quality work with banks that are being withdrawn from the market and the return of funds to depositors.
Previously, international lenders have repeatedly insisted on changing the Ukrainian government's approach to personnel policy in such important state institutions. IMF representatives have not just talked about the need to hold open competitions involving foreign experts for senior positions, but have even enshrined this in the Memorandum of Cooperation with Ukraine.
In particular, Kyiv committed itself to developing an open and transparent competition procedure and appointing a new managing director of the Deposit Guarantee Fund in the spring of 2025. However, Ukraine has not yet fulfilled this requirement, as the relevant draft law has not been submitted to the Verkhovna Rada.
For some reason, neither the government nor the National Bank mentioned this. Danylo Hetmantsev , chairman of the Parliamentary Committee on Finance, Taxation and Customs Policy, notedthat the priorities emphasized by the IMF are improving the Criminal Procedure Code, creating a new Supreme Administrative Court, reforming the Accounting Chamber of Ukraine, the first external audit of NABU, and restoring the full composition of the supervisory board of Ukrenergo by the end of December. Again, there is no mention of an open competition for the head of the Deposit Guarantee Fund.
According to economic expert Oleh Pendzyn, Ukraine will ultimately fulfill any IMF requirement to get the funding it needs to maintain financial stability in the face of the war waged by Russia against our country.
Ukraine will do everything to fulfill the requirements, because as Mr. Budanov said back in November 2023 at a reporting press conference with Finance Minister Marchenko, we have been fighting in debt for 2.5 years. In reality, we have been fighting in debt for 3.5 years. And today, from an economic point of view, as well as from a military and technical point of view, Ukraine will not be able to sustain the war against Russia economically on its own. Therefore, we will look for any opportunities to fulfill the tasks set before us by our partners in order to obtain the necessary funding to continue the struggle for independence. Otherwise, we will do nothing
Be that as it may, the agreements reached by Ukrainian government officials and IMF experts must be approved by the Fund's Board of Directors, which will consider the agreement in the coming weeks. If approved, Ukraine could get access to about $1.1 billion in financing.
Recall
The requirement to hold an open competition for the position of managing director of the Deposit Guarantee Fund has become even more urgent after Svitlana Rekrut left the position . The media reportedthat the appointment of a new head is currently planned in a closed mode, despite the IMF's requirements. However, the question arises as to why the appointment should be made now in order to hold an open competition in a few months. Why, for example, can't the deputy managing director act as the new head before the new head is appointed in an open competition?
Ukraine probably wants to ignore the international lender's demand, as the partners insist on involving foreign experts in the tender commissions, who pay considerable attention to business reputation. Perhaps this explains the rush to appoint a new managing director of the Fund behind closed doors.
According to media reports, the main contender for this position is Pavlo Polarush, head of the National Bank's Department for Work with Troubled Assets. He is a favorite of the National Bank, whose representatives are members of the DGF Administrative Board, which is making the relevant personnel changes. It is possible that Polarush may be supported by the Presidential Office, as the Deputy Head of the Office, Iryna Mudra, is his common-law wife.
Journalists found outthat Polarush repeatedly traveled abroad after the start of Russia's large-scale invasion of Ukraine. In particular, the journalists reported that in November 2022, he received permission to leave the country from the odious former Deputy Minister of Defense, who is currently a suspect in corruption crimes. The permit was allegedly issued to Polarush to travel abroad in an elite Lexus car to receive humanitarian aid. However, it is not yet known on what grounds Polarush traveled abroad from February to November 2022.
Member of the Verkhovna Rada Committee on Transport and Infrastructure Mykola Velychkovych believes that law enforcement should investigate Polarush's travels abroad. And a member of the Verkhovna Rada Committee on National Security and Defense, Hennadiy Kasai , does not rule outthat Polarush may have problems during the special vetting process as a candidate for the position of managing director of the Deposit Guarantee Fund.
At the same time, MPs and experts interviewed by UNN emphasize that the election of the new head of the Deposit Guarantee Fund should be transparent and open. One of the main selection criteria, along with professionalism, should be the candidate's crystal clear business reputation.
It is extremely important to have an impeccable reputation. This is the key. It is important that this person has a decent reputation, is definitely a specialist and a patriot of Ukraine, and does not represent the interests of someone else,