The decision of the Constitutional Court of Ukraine (CCU) jeopardises the cooperation between Ukraine and the World Bank. As a result, Ukraine may not receive $2.23 billion.
“The state budget will be fully implemented provided that we receive $6.2 billion in loans from official creditors. We currently have a $3.5 billion fiscal gap which we have to finance. The country cannot afford to lose these funds. So, I advise not to speculate on this topic. I will only say that it is a critical necessity for the state,” Finance Minister of Ukraine Serhiy Marchenko said.
He added that, according to the World Bank’s management, Ukraine violated its obligations under the programme on multisectoral development policy loan (DPL) with the Constitutional Court’s decision. Accordingly, this jeopardises all World Bank’s projects implemented in Ukraine.
As the minister noted, Ukraine risks losing two IMF tranches worth $700 million each, EUR 600 million in EU assistance, and $350 million in aid from the World Bank in 2020. Next year, Ukraine may lose another $1.5 billion from the IMF, EUR 600 million from the EU, and $350 million from the World Bank.
“For example, the IBRD project on fighting COVID-19 in Ukraine to the tune of $300 million under ‘Ukraine: Social Assistance System Modernisation Project’ is almost ready for conclusion. The talks on signing are scheduled for 16 November, and approval by the World Bank Board is scheduled for 11 December. However, these issues are blocked due to the decision of the Constitutional Court of Ukraine,” the minister said.
“The development of anti-corruption infrastructure in Ukraine is a key condition of all international financial programmes since 2014. Therefore, we now run a risk of early repayment of allocated funds: about $10.7 billion from the IMF and EUR 2.2 billion from the EU,” Marchenko stressed.
To recap, EU Lead Spokesperson for Foreign Affairs and Security Policy Peter Stano earlier stated that Ukraine should immediately restore its anti-corruption infrastructure as that was a condition for further financial assistance and visa-free travel to EU countries.
“The fight against corruption is one of the key benchmarks and commitments that Ukraine has taken in the framework of the Association Agreement, the recently agreed Macro-Financial Assistance programme between the EU and Ukraine and the Visa liberalisation process,” Stano said.
He added that the EU noted the complexity of the situation and appreciated the urgency with which the President and Government wanted to address it.