Ukraine asks IMF for increased support

The Ukrainian government has asked the visiting IMF mission during negotiations to augment its USD 17 bln standby loan program, Economy Minister Aivaras Abromavičius told a Dec. 10 press conference. From its end, the IMF wants more deregulatory reforms and improved administration of state enterprises, he said. The IMF mission, led by its chief Jerome Vashe, arrived in Kyiv on Dec. 9 and will work until Dec. 18.

Alexander Paraschiy: We estimate Ukraine’s 2015 financial accounts deficit in the range of USD 15-16 bln. The current IMF program earmarks USD 12.4 bln in remaining support for Ukraine in the next 15 months. Another USD 6 bln are expected to arrive from other lenders in 2015 (out of total support of about USD 10 bln, as outlined by the IMF in April 2014).

With this non-IMF support, Ukraine should have enough funds to cover its foreign currency needs. But more support from the IMF will only boost confidence in the country’s solvency. A loan increase is possible, in our view, but now it’s more vital for Ukraine to get the agreed upon support ASAP, which will depend on commitments to reforms and austerity measures.