IMF disburses another tranche to Ukraine despite Lozovyi’s ‘amendments’ not being cancelled
Ukraine has failed to meet a key structural benchmark required for the seventh review of its programme with the IMF, and has already missed three benchmarks for the upcoming eighth review. Unfortunately, according to the Ukraine Facility’s plan, the country is also at risk of failing to meet nine indicators in the first quarter.
The members of the #RRR4U consortium reported on these risks during the presentation of the 13th issue of the Monitoring of IMF and EU Assistance under the Ukraine Facility.
‘Ukraine has not fulfilled one of its obligations – it has not cancelled the Lozovyi amendments, which it had to cancel for a successful seventh review. And the fact that Ukraine managed to reach an agreement on a review at the expert level on this issue means that once again the IMF is meeting us halfway, showing some flexibility’, said Maksym Samoiliuk, economist at the Centre for Economic Strategy.
Indeed, on 28 March, the IMF Executive Board approved the seventh review of the IMF’s programme for Ukraine. A prerequisite for the completion of the seventh review was the signing of the law on increasing excise taxes on tobacco products, which was delayed by several months and resulted in a shortfall of more than UAH 2 billion in budget revenues. At the same time, the deadline for the implementation of the structural beacon to abolish the Lozovy Rules was postponed.
The IMF reduced the size of the next tranche from $900 million to $400 million at the request of the Ukrainian Ministry of Finance.
‘In 2025, we will have a better situation with external financing of the budget deficit, primarily due to the ERA programme – financing from the proceeds of frozen Russian assets. Therefore, Ukraine has asked that we receive a little more funding in 2026-2027 in return’, explained Maksym Samoiliuk.
The next eighth review of the programme, when the IMF will check the implementation of structural benchmarks at the end of March, could also be problematic.
‘Out of the five benchmarks that the IMF will evaluate, we have fulfilled only two in full and on time. Three more have not been fulfilled: the appointment of the head of the Bureau of Economic Security (the competition is still ongoing), approval of the external audit of NABU and preparation of a strategy for the NSSMC. The progress cannot be called satisfactory. We will either have to meet the milestones on time – we have until June to do so – or negotiate with the IMF to change these milestones or postpone their deadline’, said Maksym Samoiliuk.
Having shown flexibility again, the IMF postponed the implementation of the respective milestones during the review, which makes the eighth review of the Programme more likely.
In parallel, Ukraine is working on a reform programme with the EU. In mid-March, the Council of the European Union approved €3.5 billion (including €400 million in grants) for Ukraine for meeting the indicators for the fourth quarter of 2024. In total, Ukraine expects €12.5 billion from the EU in 2025.
DiXi Group project expert Alyona Korogod warned that Ukraine has already faced problems with fulfilling its obligations under the Ukraine Facility for the first quarter. ‘Ukraine has to fulfil 16 indicators by the end of March. As of the 27th of March, only seven have been fulfilled. Nine more indicators remained unfulfilled,’ she said. ’We may repeat the path of last year, when there was a delay in implementation, which led to a delay in reporting and, accordingly, a delay in disbursement, which in this situation can occur as late as June. This is not very good’.
Oleksandra Betliy, moderator of the discussion and leading research fellow at the Institute for Economic Research and Policy Consulting, said that several indicators are expected to be met by the end of March and expressed hope that Ukraine will fulfil the remaining obligations in the near future: ‘We hope that at least in April we will fulfil them and receive funding in the second quarter, albeit with a delay’.
The special topic of the March issue of #RRR4U was the problems with the cancellation of the Lozovyi amendments. Vyacheslav Kurylo, an analyst at the Institute of Analysis and Advocacy, explained that the Lozovyi amendments had been partially cancelled earlier, and now this term is understood to mean the proposed amendments to the CPC to set the term of pre-trial investigation, the closure of criminal proceedings due to the expiration of this term, and the procedure for its extension.
Despite the fact that this structural beacon appeared in the IMF memorandum back in the summer of 2024 and was supposed to be implemented by October and then by December, it has not yet been implemented. ‘In fact, the authorities have failed to meet this milestone, and it has been postponed to the end of July. At the same time, there are warnings from all key parties regarding the fulfilment of this obligation: MPs, business and a number of other organisations’, Vyacheslav Kurylo said.
A compromise will have to be sought for the format of cancellation of Lozovyi’s amendments, as there is currently a government draft law, and MPs have submitted three alternative draft laws. Business does not support any of the documents, and NABU does not support one of the MPs’. But there are risks in all draft laws.
According to business ombudsman Roman Vashchuk, about 94% of cases against businesses never go to court. ‘And in a slightly smaller number of cases, suspicion is not even announced’, he said. ’Proceedings, which can now go on indefinitely, are the main form of pressure on business by unscrupulous government agencies.
The business community insists on two positions. ‘The first is to extend the terms only through the court, not by prosecutors on their own. The second is to limit the range of criminal proceedings in which cases with unlimited terms can be considered’, said Andriy Yerashov, head of the Analytical Centre of the Union of Ukrainian Entrepreneurs.
Pavlo Demchuk, Senior Legal Advisor at Transparency International Ukraine, believes that the terms of criminal proceedings should be reasonable. ‘We have also seen many times when judges automatically closed well-known cases conducted by anti-corruption agencies because the pre-trial investigation timeframe exceeded the limit. That is why we stand by our position that automatic closure of criminal cases should be cancelled’, he said. At the same time, he emphasises that all available versions of the draft law need to be improved.
Yevhen Tokar, head of the NABU’s organisational and analytical support detectives, said that at the pre-trial investigation stage, the investigating judge does not examine all the materials of the criminal proceedings, as is the case during the trial. ‘The proposals contained in the alternative draft law No. 12367-3, which we support the most, stipulate that the prosecutor may extend the term to six or 12 months’, says Tokar.
But given the business’s distrust of prosecutors’ decisions, this area also needs to be reformed. ‘We need to stop talking only about judicial reform. It should be implemented together with the prosecution reform. If we talk only about honest judges and forget about the importance of honest prosecutors, business will unfortunately not be protected,’ says Oleksandra Betliy.
For more details, please follow the link For more details, please follow the link https://rrr4u.org/analytics/monitoryng-vykonannya-programy-mvf-ta-dopomogy-yes-berezen-2025/
Video recording of the event: https://youtu.be/EOV_prOhnSs
The preparation of the Monitoring and this event were supported by the International Renaissance Foundation.
RRR4U (Resilience, Reconstruction and Relief for Ukraine) is a consortium of four Ukrainian civil society organisations: Centre for Economic Strategy, Institute for Economic Research and Policy Consulting, Institute for Analysis and Advocacy, DiXi Group.
