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“Harsh” IMF’s love: Pension reform, open land market, abolition of simplified taxation – Ukrainska Pravda

The Ukrainian government has a hard choice to make if it wants to receive $1 bln tranche from the IMF, according to Ukrainska Pravda
"Harsh" IMF's love: Pension reform, open land market, abolition of simplified taxation

The International Monetary Fund has put forward strict requirements Ukraine has to fulfill if the country wants to continue cooperation with the Fund, according to Ukrainska Pravda.

It is necessary to raise the retirement age, reduce the number of state employees, to abolish the simplified taxation for small business and open the land market. This is only a part of the Fund’s guidelines, Ukrainska Pravda reports.

Ukraine has adopted a budget for 2017 and nationalized [the biggest private bank] Privatbank. It’s a ‘green light’ for the IMF tranche of $ 1 billion.

“The mission of the International Monetary Fund in the coming weeks may recommend to the Board of Governors of the Fund to hold the third revision of the Extended Fund Facility (EFF) program,” – Jerry Rice, an official representative of the Fund has said recently.

He noted the significant progress of Ukraine in recent months in implementing the necessary reforms to revise the program. Namely, the adoption of the state budget corresponding to the EFF program objectives, a launch of the e-declaration system, and “decisive actions to ensure the financial stability of the country.”

According to the IMF representative, the mission of the Fund is now to continue consultations with the Ukrainian authorities on the remaining issues. That is, the government has a good chance of getting another $1 billion tranche.

But the new commitments Kyiv must perform to continue cooperation could be much more painful. This comes from the updated memorandum on Ukraine’s cooperation with the IMF, obtained by Ukrainska Pravda.

It contains a number of strict requirements, which the Fund insisted on before. The IMF requires to carry out the pension reform, which includes raising the retirement age, reduce the number of state employees, to abolish the simplified taxation for small business and open the land market.

Obviously, any mention of such reforms provokes new tensions in the society. Besides, the fulfillment of these requirements threatens the ratings of the politicians, personnel reshuffle at all levels of the government, and a political turbulence.

Currently, the document is at the stage of negotiation. On the one hand, it is just a recommendation and not a guide to action for the Ukrainian authorities. On the other – if the government considers the IMF’s requirements as an advice only, then they should not count on a new tranche.