September 7, 2017 / 10:57 AM / 17 days ago

Urging reforms, Poroshenko says Ukraine can't cope without IMF

Ukrainian President Petro Poroshenko delivers a speech to parliament in Kiev, Ukraine September 7, 2017. Mikhail Palinchak/Ukrainian Presidential Press Service/Handout via REUTERS

KIEV (Reuters) - President Petro Poroshenko said on Thursday that Ukraine would struggle badly if it ditched its IMF aid program, urging lawmakers to pass anti-corruption and pension reforms that the Fund has called for.

Ukraine has received $8.4 billion from the International Monetary Fund, helping it recover from a two-year recession following the annexation of Crimea by Russia in 2014 and the outbreak of a Russian-backed insurgency in its industrial east.

But Fund officials are concerned that the country is backsliding on some of its promises, while reformist politicians and activists have questioned the authorities’ commitment to enacting lasting change.

Further disbursements from the $17.5 billion program depend in part on the pension reform being implemented and a review of gas prices that could lead to a rise in utility tariffs. Both policies face stiff opposition from populist lawmakers.

Poroshenko said the economy was expected to grow 1.8 percent this year, but that continued macroeconomic stability depended on Ukraine honoring its commitments.

“We need to implement the IMF program, without which Ukraine is extremely vulnerable,” he said in a speech to parliament. “I hope the pension reform will be passed at the next session.”

“It is urgent to establish a special anti-corruption judicial body,” he added. He did not say how this body should be structured.

The IMF wants Ukraine to set up an independent court to focus on tackling corruption, which remains entrenched.

An alternative proposal by Kiev for an anti-corruption chamber in existing courts has been criticized as insufficiently independent by reform activists.

Poroshenko has been accused by activists and opposition politicians, including former Georgia president Mikheil Saakashvili, of either abetting or turning a blind eye to corruption and vested interests while paying lip service to reform.

Saakashvili was invited to become governor of the southern Ukrainian Odessa region but he quit in November, part of an exodus of reformers who left after joining the pro-Western government that emerged from the 2014 Maidan protests.

MP Yegor Sobolev, who heads parliament’s anti-corruption committee, said the president needed to follow through on his promises. “Poroshenko can say the most correct things, but the problem is he then does the complete opposite thing,” he told Reuters.

Regarding other reforms, an IMF-backed proposal to lift a moratorium on sales of agricultural land has also proved contentious in parliament.

The Fund has said Ukraine does not need to pass any land laws for the disbursement of the next loan tranche, but it will likely be a pre-condition for any further tranches.

Poroshenko said he would not force parliament to back land reforms.

He also said he was against holding early elections. Presidential and parliamentary polls are scheduled for 2019 but many lawmakers have talked up prospects of an early vote.

Additional reporting by Pavel Polityuk; Writing by Alessandra Prentice; editing by Matthias Williams and John Stonestreet

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