The Party of Regions took power in early 2010, after Ukraine had been
plunged deep in economic crisis. Over the next year, with the external
markets recovering, the country’s economic situation started to improve
gradually. Ukraine’s economic stabilisation was also strengthened by its
resumed cooperation with the International Monetary Fund, which provided
for a loan worth $15.1 billion. The issuing of successive tranches of
the loan was made dependent on the implementation of a comprehensive
reform programme. The cooperation went quite smoothly at first; however,
as the economic situation in Ukraine improved, the reformist zeal of
the Ukrainian government started to fade, and obstacles began piling up.
As a result, Ukraine was refused the third tranche, scheduled for this
March, and for the moment the credit line remains frozen. Even though the
IMF has numerous reservations about the Ukrainian government’s economic
policy, the fundamental condition for resuming cooperation is reform
of the pension system, which the parliament should adopt.
The difficulties with fulfilling the obligations made to the IMF reflect the
wider problem with implementing reforms in Ukraine, as the Party of Regions
promised after taking power. Changes which do not affect the interests
of influential lobbies are quite easy to carry out. Often, however,
these changes are not conducive to the economy’s liberalisation; moreover,
the influential lobbies are successful in blocking reforms that could harm
their businesses. Another impediment to the changes is that some reforms
are likely to bring about painful social consequences, and that can affect
public support for the ruling group.
Even though theoretically possible, it does not seem likely that Ukraine’s
cooperation with the IMF will be terminated. But even if this cooperation is
continued, deeper reforms in Ukraine are likely to be postponed until after
the parliamentary elections in autumn 2012