Fifth review of the EFF program in Ukraine: IMF insists on an open competition for the head of the Deposit Guarantee Fund

The International Monetary Fund mission has launched the fifth review of the Extended Fund Facility (EFF) program in Ukraine. This is a key stage in Ukraine's cooperation with the IMF, as it involves assessing the implementation of previously agreed benchmarks and determining further steps within the program aimed at supporting macroeconomic stability and reforms in our country, UNN writes.

On September 2, Ukrainian Prime Minister Denys Shmyhal announced the launch of the fifth review of the EFF Extended Fund Facility program, which is being conducted by the IMF Mission to Ukraine. According to him, this will allow the Ukrainian budget to receive $1.1 billion this fall. The Prime Minister of Ukraine added that during a conversation with Alfred Kammer, Director of the IMF's European Department, they discussed the implementation of reforms and the fulfillment of structural benchmarks. They noted progress in this direction. 

Despite this positive attitude of the head of the government, one important requirement of the foreign creditor remains unfulfilled. It concerns the development of a procedure and holding an open competition for the position of Managing Director of the Deposit Guarantee Fund. Ukraine has committed itself to making the appropriate legislative changes and to transparently appointing a new head of the DGF in the spring of 2025. This requirement was enshrined in the Memorandum of Cooperation between Ukraine and the IMF.

This Memorandum is the roadmap that the IMF Mission checks every time before disbursing a loan to Ukraine. If international partners realize that Ukraine is not meeting their demands, our country may find itself without funding, which is critical to maintaining economic stability during the war waged by Russia against Ukraine.

Experts interviewed by UNN emphasize that international partners have long demanded that Ukraine appoint heads of state institutions exclusively after open and transparent competitions involving foreign specialists. In the case of the appointment of the head of the Deposit Guarantee Fund, the IMF even set a clear timeframe, which indicates the importance of this point of cooperation for foreign creditors.

"Another requirement is that foreign experts must participate in the competition and evaluate the results. Because we had a situation where the competition was public, and when it came to the final result, it turned out that the person who was chosen did not have a very good reputation, and no one paid attention to it. That's why the IMF requires that if you hold a competition, the competition commission should include 30% of foreign independent experts so that they can influence the decision," said economic expert Oleksandr  Okhrimenko.

The issue of appointing the head of the Deposit Guarantee Fund has now become even more urgent. The previous head of the Fund, Svitlana Rekrut, has resigned, and now the first deputy, Olga Bilai, is acting as managing director.

After Recruit's dismissal, it became known that the Fund's Administrative Board plans to appoint a new head in a closed session . Currently, two main candidates are being considered - Bilyi and Pavlo Polarush, head of the National Bank's Department for Work with Troubled Assets, who is called by the media the main contender for this post. 

The journalists found out that Polarush repeatedly traveled abroad after the start of Russia's large-scale invasion of Ukraine. In particular, the journalists reported that in November 2022, he received permission to leave the country from the odious former Deputy Minister of Defense, who is currently a suspect in corruption crimes. The permit was allegedly issued to Polarush to travel abroad in an elite Lexus car to receive humanitarian aid. However, it is not yet known on what grounds Polarush traveled abroad from February to November 2022.

Member of the Verkhovna Rada Committee on Transport and Infrastructure Mykola Velychkovych believesthat law enforcement should investigate Polarush's travels abroad. And a member of the Verkhovna Rada Committee on National Security and Defense, Hennadiy Kasai , does not rule outthat Polarush may have problems during the special vetting process as a candidate for the position of managing director of the Deposit Guarantee Fund.

At the same time, MPs and experts interviewed by UNN emphasize that the election of the new head of the Deposit Guarantee Fund should be transparent and open. And one of the main selection criteria, along with professionalism, should be the candidate's crystal clear business reputation. 

"It is extremely important to have an impeccable reputation. This is the key. It is important that this person has a decent reputation, is definitely a specialist and a patriot of Ukraine, and does not represent the interests of someone else," MP Mykhailo Tsymbalyuk emphasized .

There is not much time left to fulfill the IMF's requirements for the selection of candidates for the position of the DGF Managing Director, so we can only hope that we will soon see changes in approaches to personnel policy. This is especially true given that the results of the fifth review of the EFF Extended Fund Facility program will determine the next steps of cooperation between Ukraine and the IMF, as well as the possibility of receiving the next loan tranche.