29 December 2015
The Ukrainian government may seek to revise the current schedule of IMF tranches in 2016, Deputy Finance Minister Artem Shevalev said in an interview published on Dec. 28 by apostrophe.com.ua. “We anticipate that the successful continuation of the program will allow for discussing a potential merging of the wires in the beginning of 2016,” said Shevalev. “But for this we need to do everything to stay within the IMF program.” The IMF memorandum will be revised again to reflect the 2016 budget and its tax changes, possibly concentrating on pension reform and anti-corruption measures, he said.
The initial schedule of IMF tranches presumed USD 10 bln arriving in 2015 (Ukraine has received USD 6.7 bln so far) and USD 2.5 bln p.a. wired in 2016, 2017 and 2018.
Alexander Paraschiy: It’s no surprise the Finance Ministry is talking about merging IMF wires. An anticipated USD 1.65 bln tranche was delayed past due to the prolonged budget process. The last payment Ukraine received was only in August and it is high time to update the schedule. Since all crucial requirements had been implemented (most notably, the 2016 budget was approved with a 3.7% of GDP deficit), we do not anticipate any objections from the Fund in merging some of the wires in 2016. However, if Ukraine is going to request combining the next wires (USD 1.65 bln each), that could mean a delay in their disbursement. While we initially expected the next tranche in January, the merged tranche can be delayed by 1-3 months. The exact timing of the new tranche is not critical for Ukraine’s gross foreign reserves (which are close to three months of future imports now), but it could add some nervousness to business, especially on the ForEx market, we believe.