SBA program with IMF could be extended for 6M, Ukraine finance minister believes

Ukraine’s finance minister Serhiy Marchenko supposes
that the on-going Stand-by Arrangement (SBA) with the IMF could be extended for
six months, Intrefax-Ukraine reported on Aug. 25. This possibility is being
discussed, but there is no final solution yet, Marchenko commented. He also
said that next year’s state budget will assume a deficit of 3.5% of GDP (vs.
5.5% deficit in 2021).

Recall, the 1.5 year SBA program started in June 2020, according
to which Ukraine was expected to pass four program reviews upon which was
expected to receive in total SDR 2.1 bln (USD 3.0 bln) of financing, in
addition to the initial tranche of SDR  1.5 bln (USD 2.1 bln). Thus far,
Ukraine has passed no reviews. The next IMF review mission to Ukraine is scheduled for September, which means
the first program review is most likely to be approved no earlier than
November, after Ukraine’s parliament approves the 2022 budget.

Alexander Paraschiy: As the IMF is unlikely to combine four planned reviews of the SBA
program in just one review, the extension of the program looks like a logical
step to avoid Ukraine failing to complete the program. In any case, we see that
even one tranche under the SBA is not secured for Ukraine: as recent history
suggests, Ukraine’s officials could make any time unexpected steps that cancel
previous achievements and progress under western-sponsored programs.