World Bank to consider USD 0.5 bln in guarantees for Naftogaz next week
11 October 2016
The World Bank’s board of directors will consider extending USD 500 mln in loan guarantees to Naftogaz on Oct. 18, Interfax-Ukraine reported on Oct. 10, citing the bank. With these guarantees, Naftogaz will be able to borrow money for the purchase of natural gas abroad.
The guarantees also might be accompanied by trade financing of up to USD 200 mln from the International Finance Corporation for natural gas purchases from a large European supplier, ENGIE. Last year, the EBRD opened a credit line to Naftogaz for USD 300 mln.
Alexander Paraschiy: The potential loan guarantees for gas purchases is good for the Ukrainian currency. As we saw from August trends, resumed natural gas purchases – rising to 1.4 bcm in August from 0.4 bcm in July – immediately translated into depreciation pressure on the hryvnia. External loans will be very helpful for relieving the pressure. Through October-December, Ukraine will have to purchase nearly 5 bcm of natural gas, we estimate, in what will cost about USD 1 bln. These purchases could be mostly covered from the loans and ease depreciation prospects. In which case, disregarding the expected further expansion of the current account deficit in Ukraine, the hryvnia might strengthen beyond our forecast of UAH 27.0/USD as of end-2016.
