Volodymyr Zelenskyy, President of Ukraine speaking in the "Special Address by Volodymyr Zelenskyy, President of Ukraine" session at the World Economic Forum Annual Meeting 2020 in Davos-Klosters, Switzerland, January 22, 2020. Congress Hall World Economic Forum / Boris Baldinger

The President of Ukraine Volodymyr Zelensky is having talks directly with the IMF in what he calls a “decisive stage.”

The president of Ukraine Volodymyr Zelensky has announced upcoming telephone talks with the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, about the Stand-By Arrangement (SBA), reports Interfax-Ukraine.

The talks are supposed to take place on Wednesday, and while the president seems hopeful, he has not been very concise about the topic or the probability of achieving agreement with the IMF.

“At 17:00, I think I have a call regarding our situation. I believe that we, in general, have a lot of things ready. Perhaps, the Ministry of Finance and the IMF management are agreeing on some things. Today, we will talk about what is ready and what is not yet ready,” the president said at a press conference according to Interfax.

“It seems to me that we are at a decisive stage,” Zelensky added.

The uncertainty about NBU

One of the things that seems to be a matter of discussion between IMF and Ukraine is the independence of NBU, the National Bank of Ukraine. Just yesterday, Ukraine Nu published an interview with the head of the Swedish bank SEB in Ukraine, Kristian Andersson, where this was mentioned.

“The IMF is still worried about the independence of the NBU,” said Andersson, “The IMF is also still worried about the restoring and strengthening of the anti-corruption bodies, so there is a lot of work to do for the Ukrainian parliament. Work is underway, but I don’t think that Ukraine will get the second tranche.”

This is backed up by Sologub, a former member of the board of management in NBU, who recently left as his contract expired. He was one of the last members of the old management that successfully reformed the IMF since the revolution in 2014.

“When the IMF voices concerns about the central bank’s independence and governance 12 months in a row, in political circles, there’s a growing understanding that things at the NBU are not going well,” said Sologub to Kyiv Post, “Whether it’s shared by the governor, I don’t know. His public position remains very much the same; he is very upbeat and very defiant.”

The problems in NBU

The actions of the NBU are attracting a lot of attention in Ukraine and abroad because of trouble in 2020. Yakiv Smolii resigned as the head of the NBU in June last, which made waves. Back then, he cited political pressure from the Presidential Office as the reason for his resignation. That brought the attention of the International Monetary Fund, IMF, which had just approved a new 5 billion dollar loan to Ukraine. The loan has since been stalled.

Up until that point, NBU had been a poster child for the reform movement in Ukraine. It had been reformed successfully and had helped to carry out essential reforms of the – at the time – ineffective banking sector in Ukraine. However, following Smolii’s resignation, the board was slowly replaced as contracts ran out, and the top management is now replaced by a new group of people.

With Zelensky him self claiming that it is now or never, chances are that next week will bring an answer to the question: Will Ukraine receive a second tranche of the IMF loan? It might very well also tell us more about the relationship between the bank and Ukraine moving forward.