Next IMF wire might be delayed, Ukraine central bank head says

A USD 1.3 bln wire from the IMF, scheduled to have been wired by the end of 2016, might be delayed till next year, Valeria Gontareva, the head of the National Bank of Ukraine (NBU), said in an interview with the Reuters news agency published on Nov. 9. “Our baseline scenario presumes an extra USD 1.3 bln this year. But there are risks that we will not make it this year,” she said, citing a delayed vote on a balanced budget, delayed pension reform and a lack of land reform.

“If we don’t get next wire and USD 700 mln in macro-financial support from the EU, our gross international reserves will be almost unchanged from USD 15.5 bln currently, which is 3.7 months of imports,” Gontareva said. In which case, Ukraine’s plan submitted to the IMF for gross international reserves to swell to USD 23 bln by the end of 2017 is at risk, as well as further ForEx liberalization, she said.  

Alexander Paraschiy: Gontareva words are in line with our expectations. The IMF memorandum made it clear that Ukrainian authorities should strengthen the targeting of utility-related social support and submit a draft law on agri-land circulation to get the next wire from the Fund. Yet that hasn’t been done. 

What’s more, Prime Minister Volodymyr Groysman has come out with controversial ideas on the 2017 budget, like a proposal to double minimum wages starting Jan. 1. Such populist stunts by Ukrainian authorities could hardly encourage IMF officials to approve the next wire disbursement. And it’s no longer a question of whether Ukraine gets its next wire in 2016 or not. Now it’s a question or whether Ukraine completes even a minimum of the Fund’s requirements in 2017.