IMF board to consider SBA with Ukraine on June 9

The IMF executive board will meet on June 9 to
consider Ukraine’s request for a Stand-by Arrangement (SBA), the fund’s website
reported on June 3. The IMF reached with Ukraine a staff-level agreement on a
new 18-month SBA on May 21. The new program assumes USD 5 bln (SDR 3.6 bln) in
financing “to help the authorities address the effects of the COVID-19 shock,”
the head of IMF team, Ivanna Vladkova Hollar, commented on May 21. “The
arrangement is also expected to catalyze additional bilateral and multilateral
financial support,” she said.

Alexander Paraschiy: Having overcome a long series of hurdles, it seems that nothing at
this point will prevent the new Ukraine-IMF deal, which is a very positive
development for Ukraine’s solvency outlook for this year. Upon the signing of
the deal, possibly next week, Ukraine will await the first IMF tranche under
the SBA of about USD 1.8-1.9 bln, as well as other multilateral and bilateral
support for about USD 2 bln (including World Bank and EU financing programs).
Also, we continue to expect that Ukraine will try to use the increased optimism
about the country to issue a new Eurobond that will significantly reduce the
Finance Ministry’s need to count on scarce internal sources to finance this
year’s budget deficit.