Yesterday's statement by IMF spokesman Jerry Rice alarmed the financial market and the public in general. He says that the International Monetary Fund is no longer working with Ukraine to sign a large-scale long-term loan program for extended financing Extended Fund Facility (EFF). It will be limited to anti-crisis lending under the stand by project.

The first obvious difference between the two approaches is the timing of financing. EFF is a credit line for 3 years, and stand by program is an operational crisis financing for 18 months. It means that they quickly intercept money, as people say, “before the payday”. Therefore, the approach is different: one implies structural changes, and the other - the solution of momentary problems on the surface and the closure of current budget holes.

Almost the entire history of cooperation between Ukraine and the IMF is based on the notorious stand by. Our country received the first loan back in 1995, and the program had been signed until 1998. It was urgent to close the state budget deficit and stop the devaluation of hryvnia. It then fell from 3.4 UAH / $ to 5 UAH / $. Then the devaluation was stopped by the chairman of the National Bank Viktor Yushchenko and mainly by administrative levers - he phoned the chairmen of commercial banks and ordered them not to go out to buy dollars on the interbank market. He did not have another instrument since the size of the NBU’s gold and foreign exchange reserve amounted to $ 700 million. Now, this is the volume of the regulator’s monthly purchase of foreign currency at the interbank market, and back then it was the entire country's foreign exchange reserve. This is why the government was so eager to please the IMF so to get at least a stand by. Its size was about $ 2 billion, and it was a gigantic amount for Ukraine.

After that, our authorities tried to go up a notch - to switch to the EFF program from the IMF. Before 2002, this program was signed for $ 2.6 billion. However, the government did not take out the entire amount - only $ 1.6 billion, resorted to stand by again, and for many years did not rock the boat - they remained on this program until 2015. It had been re-signed three times, but the credit limit was not maxed out. The authorities were placed under yet newer conditions, but they could not be fully met.

A new attempt to gain a foothold in the EFF program took place in March 2015, after the restructuring of the external public debt. The restructuring was humiliating, unprofitable, and even criminal, but the country was able to avoid default. For this reason, Ukraine was beckoned by promises of expanded funding for EFF for 4 years with a total volume of $ 17.5 billion. President Poroshenko presented this as his huge victory.

However, the country again did not take out the full amount. In 2015, we were allocated less than a third, in 2016 - a tiny $ 1 billion pittance, and after that EFF was stopped. In 2018, there was another return to stand by. However, this time global restructuring of Ukraine was put forward as a requirement for switching to stand by. And now it wasn’t only the standards of the IMF’s chief controller- the USA but also the terms of Poroshenko, the former chairman of the National Bank, Valeria Gontareva, and their accomplices. They submitted a lot of their demands to the International Monetary Fund Memorandum, which they are still trying to lobby.

For instance, the removal of responsibility for the collapse of the banking system in 2014-2016 and others. At first, they were promoted under the guise of Ukraine’s signing of an EFF extended financing program with the IMF, but now it’s become known that all this will be done so that we can quickly intercept money by stand by program.

After Jerry Rice’s statement, Ukrainian officials vied with each other to declare that Ukraine would receive no less according to stand by in 2020 than EFF - $ 5 billion. They try not to remind that initially, it was about $ 8 billion for 3 years, and now it will be $ 5 billion for a year and a half. The message is this: well, the country will not receive another $ 3 billion in 2022-2023, but this year the amount of financing will not be changed, and everything else will come later. They say that Ukraine will be able to get a bundle of loans from other sources: the macro-financial assistance program of the European Union, the World Bank, National Bank swaps (although the NBU has not learned how to work with swaps and failed with a similar program with China - it’s too difficult for the narrow-minded government of Smoly, Rozhkova, and Churiy).

Although it is completely obvious that the government failed credit negotiations since it does not have a real program of economic development, neither during coronavirus quarantine nor after it. It remains a puppet in the hands of the energy oligarch with the task of increasing DTEK’s earnings (by raising electricity tariffs). If earlier they somehow managed to negotiate with the USA and the IMF, then after a series of corruption scandals, there can be no question of any trust.

Therefore, we decided to return to the stand by program, and to remain with it. The main thing is to grab the first tranche now to finance the current state budget deficit, which is now bursting at the seams. Everything is the same as it was in 1995. No one thinks about further steps.

Officials vying with each other now claim that stand by program is even more profitable for us because there are fewer requirements from the IMF. However, you should not believe everything they say. There will be plenty of conditions. Americans aren't known to act as a charity. So we need to get ready to meet the new requirements. Both from the IMF itself, as well as from their other sources, which, of course, will be presented as American.

Andrey Pshenichny for the site dubinsky.pro