NBU reduces expectation for IMF loans this year

The National Bank of Ukraine (NBU) announced in a Jan.
25 press release it now expects IMF loans of around USD 2 bln this year, after
previously estimating USD 3.5 bln. The IMF financing, coupled with expected
loans from the EU and World Bank, will help to boost the country’s
international reserves to USD 20.5 bln by end-2018 from USD 18.8 bln at
end-2017, according to NBU projections. To secure these loans, which are needed
to help make external debt repayments of USD 16 bln for 2018-20, the government
should progress in structural reforms needed for maintaining macroeconomic
stability and ongoing IMF cooperation, the NBU said.

The next IMF loan tranche for Ukraine should arrive by
April, Ukrainian President Petro Poroshenko told the World Economic Forum in
Davos on Jan. 25. “Likely, I’m crossing my fingers that the mission will
visit us by April and we’ll have the next tranche,” Poroshenko said. The
same day, Finance Minister Oleksandr Danylyuk estimated the next tranche
arriving in May.

The NBU is planning to propose at a meeting with
Finance Ministry officials the initiation of a new IMF loan program starting in
2019, when the current External Funds Facility expires, acting NBU head Yakiv
Smoliy told a Jan. 25 press briefing. “We haven’t started talks with the
IMF, but we are already thinkng about when it’s possible,” he said
regarding the new loan program. Such a program is necessary considering foreign
debt payments will peak in 2019-20 while the current program expoerts in 1Q19.

Evgeniya Akhtyrko: Besides its more conservative projections for IMF financing, the NBU
also expects less reserves, which had been previously projected at USD 22.2 bln
at end-2018. Despite some recent progress in talks between Ukraine and the IMF, we don’t expect Ukraine will get more than USD 1
bln from the IMF this year. We believe that money arriving in April or May is
realistic.