Poroshenko expects new IMF tranche in February

The IMF has reached agreement with Ukraine on all its issues and in “the very near future” will finalize a memorandum that will enable Ukraine to receive the next tranche, Ukrainian President Petro Poroshenko told the Bloomberg news agency after his meeting in Davos with IMF Managing Director Christine Lagarde  on Jan. 21. He also expressed his expectation that the new IMF tranche will arrive in February. At the same time, Poroshenko did not give a direct answer on the question of whether outstanding issues between Ukraine and the IMF remain.

Lagarde also looked optimistic after the meeting, stating that “it was a very productive discussion.” She said she hopes it will bring the sides closer to the memorandum’s signing and that “this process will be completed successfully.”

No other details on the memorandum or the size of the upcoming tranche were revealed.  Later that day, the Presidential Administration tweeted that Poroshenko is expecting a USD 7 bln disbursement from the IMF in 2016. The next scheduled IMF tranche under the EFF program (launched in March 2015) is worth USD 1.6 bln.

Alexander Paraschiy: Ukrainian and IMF officials tried to sound as positive as they could, but we conclude from their vague statements that the preparation of the new memorandum is not going smoothly. In any case, we share the alleged optimism of both sides that all the preparations for a new IMF tranche will be completed soon.

Poroshenko’s expectation to receive USD 7 bln from the IMF this year is a bit confusing. Based on the initial conditions of the EFF program, Ukraine cannot receive more than USD 5.8 bln in 2016, including USD 2.5 bln initially planned for this year and USD 3.3 bln carried over from 2015 (last year, Ukraine got only USD 6.7 bln out of the planned USD 10 bln).