Ukraine asks IMF to merge third and fourth loan tranches

Ukrainian authorities have asked the IMF to revise the loan tranche schedule under their USD 14-18 bln standby arrangement, Finance Minister Oleksandr Shlapak told journalists on Aug. 20. The Cabinet of Ministers wants to merge the third and fourth wires – initially scheduled for Sept. 25 and Dec. 15 respectively – with the goal of securing the full reception of all IMF funds committed for 2014 by the year end. They are each worth USD 1.4 bln.

Alexander Paraschiy: The IMF’s prolonged technical mission in July – due to the need for deeper adjustment of Ukraine’s macro assumptions – delayed the arrival of the second wire (USD 1.4 bln) by more than a month until early September from the initially scheduled July 25. This delay has left no time for the two additional program reviews initially planned for this year. Yet the government badly needs external financial support to weather the current struggles.

We remain very positive about a potential executive board decision on Ukraine, expected on Aug. 29. The second wire will be a very positive signal for the domestic ForEx market, which was destabilized at the end of July by the political crisis and worsened industrial performance in the war-afflicted eastern regions.