IMF board meeting on Ukraine loan scheduled for Dec. 18

The International Monetary Fund has scheduled a board
meeting to consider Ukraine’s request for a stand-by loan arrangement for Dec.
18, according to the fund’s website. The new program assumes up to USD 3.9 bln
in loans to be provided in the next 1.5 years and will replace the existing USD
17.5 bln Extended Fund Facility (EFF) program, which the IMF board will cancel.
The EFF program, started in March 2015, resulted in four loan tranches for USD
8.6 bln. 

Last week, Ukraine’s Cabinet at its weekly meeting
approved a letter of intent to sign the IMF memorandum for the stand-by
program. The key pre-condition for the program was Ukraine’s approval of the
2019 state budget with a deficit not exceeding 2.5% of GDP, which the parliament accomplished on Nov. 23,
its earliest approval ever.

Alexander Paraschiy: That
scheduling is fully in line with our forecast that IMF board will decide on
Ukraine closer to the board meeting of the World Bank, or Dec. 18.
If nothing wrong happens on Ukraine’s political side, we expect that both the
IMF and the World Bank will make positive decisions on providing Ukraine with
new loan tranches. Therefore, we expect that IMF money of about USD 1.4-1.5
bln, as well as a loan guaranteed by the World Bank of USD 0.6-0.8 bln, will
arrive as Christmas gifts for Ukraine (that is, the Julian calendar Christmas
of Dec. 25). These loans, together with the expected MFA tranche from the EU
(EUR 0.5 bln), will enable Ukraine to increase its gross reserves by almost USD
3 bln in December. That will add stability for Ukraine’s currency ahead of the
turbulent period of the spring presidential elections campaign.