The Swedish newspaper Goteborgsposten quoted Raiffeisen Bank International economics expert Andreas Schwabe as saying that the International Monetary Fund (IMF)’s reluctance to allocate money to Ukraine clearly shows the West’s frustration about Kiev’s unsuccessful attempts to reign in corruption.
The newspaper recalled that a year ago, the IMF promised to provide cash-strapped Ukraine with more money, but finally refused to do so, referring to the fact that Kiev has yet to introduce an electronic system for registering the income and expenses of the powers that be.
“This can be interpreted as the IMF’s huge discontent with the way Ukraine is trying to rein in corruption and restart the stalled reform of the pension and tax systems,” Schwabe said.
If Kiev does not receive an IMF tranche in the near future, it will have to cut pensions and salaries in the country, a scenario that Schwabe said would come as no surprise.
The consequences are difficult to foresee, Goteborgsposten said, quoting Schwabe as saying that “everything is possible in Ukrainian politics.”
“Turning Ukraine into a Western country-like state with the rule of law and a favorable investment climate is certainly a big challenge”, he said, adding that that better ties between Russia and Ukraine are a more probable scenario in the next five years than Ukraine’s possible accession to NATO.
Speaking at this week’s Atlantic Council session, former Ukrainian Prime Minister Arseniy Yatsenyuk said, for his part, that Ukraine’s European partners should help fund a salary increase for Kiev officials to eliminate corruption in the public sector.
Earlier this year, market analyst and investment consultant Patrick Young told Radio Sputnik that the real threat to Ukraine isn’t the Donbass militia, but widespread corruption in the Kiev government.
Fighting corruption in Ukraine isn’t a question of time, it’s a “matter of mindset,” the expert explained, adding that the Ukrainian leadership hasn’t shown any signs that the situation with corruption would get better any time soon.
The Ukrainian economy has deteriorated since an armed conflict between government forces and supporters of the Donbass region’s independence in the country’s southeast escalated in April 2014.
Kiev has been forced to increasingly rely on external funding to reanimate the economy amid a deep recession and high inflation.
In May, the IMF announced it would consider disbursing $1.7 billion in assistance to Ukraine following its successful conclusion of a second review. However, Ukrainian media reported in June that the fund could reduce the next tranche to Kiev to $1 billion.
On March 11, the IMF approved a four-year program of financial aid to Ukraine, which stipulates a $17.5 billion loan over the next four years. The Ukrainian government has to implement new economic policies for the IMF to disburse the funds.