Ukraine PM expects IMF, EU loans in late 2021

Prime minister Denys Shmyhal expects that Ukraine will
receive the next IMF tranche under the Stand-by program in late November or
early December, Interfax-Ukraine reported on Sept. 14 citing the PM’s press
briefing. Shmyhal assured that Ukraine has met all the structural benchmarks
necessary for the tranche and stated that the government rules out a negative
result from the IMF’s review mission that will start next week. Shmyhal expects
the size of the next tranche will be about USD 750 mln. The IMF’s memorandum
assumes that upon the first review of the IMF’s Stand-by program, Ukraine would
receive an SDR 500 mln (about USD 715 mln) loan tranche.

Shmyhal also reported that the government is expecting
a second tranche from the EU under the COVID-19-related Macro Financial
Assistance program after the European commission “receives the signal from the
IMF,” which can happen in November. The size of the scheduled tranche is EUR
600 mln.

Alexander Paraschiy: We agree with Shmyhal that the IMF and EU money can arrive not earlier
than November, or as soon as Ukraine’s parliament approves the state budget for
the year 2022. If that happens, MinFin would be able to finance a large portion
of the remaining 2021 budget deficit from this money so that its need for
raising domestic debt for deficit financing would significantly decrease.
However, unlike Shmyhal, we cannot rule out possible problems that may arise in
Ukraine-IMF relations by late November. Thus far, we see the probability of
IMF/EU financing in 2021 as no higher than 50%.