Ukraine appoints customs chief to strengthen hand in upcoming IMF talks

Prefer on Google by Luca Léry Moffat, Liliane Bivings The Nyzhankovychi - Malkhovychi checkpoint on the border between Ukraine and Poland in Lviv Oblast on Dec. 21, 2024. (Michael Sorrow/Anadolu via Getty Images) Ukraine appointed a new head of the country's customs service, fulfilling a long-delayed commitment to international partners as part of a reform push. Ukraine's Finance Minister Serhii Marchenko approved Orest Mandziy as head of the State Customs Service, Ukrainian Prime Minister Yulia Svyrydenko said on April 10. Manziy was formerly a detective at the National Anti-Corruption Bureau of Ukraine, or NABU. The country's customs service is widely seen as one of the most problematic government institutions in Ukraine, with billions of dollars in revenues forgone each year due to smuggling. "We expect the new head to continue the reform of the customs service, forming a modern, transparent, and efficient customs system that works to ensure the financial stability of the state," Svyrydenko said in a post on Telegram. As part of a push to improve Kyiv's revenue collection to raise money for the war effort, Ukraine agreed to select a new permanent head of the service as part of a 2023–2025 lending agreement with the International Monetary Fund. But the selection process was repeatedly stalled. The fund extended the deadline to March 31 as part of a new $8.1 billion program, agreed in February this year, which today's appointment fulfills. Ukraine is in a race against time to fill its state coffers before June, when it faces a cliff in foreign financing needed to keep the country afloat. Failure to adopt all the conditions of the $8.1 billion program could jeopardize the next tranche of the program, worth almost $700 million and scheduled for June. Ahead of the high-level IMF Spring meetings in Washington, D.C. next week, Kyiv moved to complete several reforms required by international partners, after pressure mounted in recent weeks to make progress on a long list of delayed measures. Ukraine's parliament passed one of four new taxes required by the IMF under the fund's new lending agreement on April 7 — although the other three are yet to pass. The most contentious of the new IMF-backed taxes that has yet to pass is a value-added tax on individuals earning above a certain threshold under Ukraine’s "self-employed entrepreneur" regime, known by its Ukrainian acronym FOP. The status is widely used across all sectors in Ukraine, and the change has been met with fierce opposition. While Kyiv had originally agreed to push through the tax by March 31, public outcry has given officials pause. Several lawmakers told the Kyiv independent on the condition of anonymity that they expect the Ukrainian team to try and negotiate on some of the most controversial elements of the IMF loan program, particularly the tax on self-employed entrepreneurs. The move to appoint a customs head in the lead up to the meetings in D.C. could be a way of seeking leverage in the talks by showing progress on reforms closely watched by the IMF. A similarly high-profile appointment was also stalled last year after Ukraine’s government refused to appoint Oleksandr Tsyvinsky, a former detective at NABU, to head the Economic Security Bureau, despite his selection by an independent commission. The appointment of a new director to the bureau by the end of July was also a requirement under Ukraine’s commitments to the EU and the IMF. But the government rejected Tsyvinsky on the grounds that he had ties to Russia — a claim lawmakers and activists said was unfounded. Following the government’s move to weaken NABU , which sparked the first wartime protests and drew widespread condemnation from Ukraine’s partners abroad, officials ultimately reversed course. Tsyvinsky was appointed head of the agency and has served as its chief since August last year.