Ukraine seeks IMF program extension

A Ukrainian delegation flew to Tokyo yesterday to ask the International Monetary Fund’s board of directors to extend the country’s USD 16.5 bln standby loan agreement, due to expire this month, for another year. According to Kommersant, the delegation included Economy Minister Petro Poroshenko, Finance Minister YuriyKolobov and Central Bank Head Sergey Arbuzov. Ukraine signed a two-year agreement with the IMF in October 2010 and to date has drawn only USD 3.4 bln. Representatives from the pro-presidential Party of Regions were quick to note that seeking an extension did not indicate a willingness to compromise on key stumbling blocks that have frozen the facility, namely raising household gas tariffs.

Brad Wells: We view an extension by the IMF as possible to keep dialogue open with Ukraine and on the potential that Ukrainian politicians soften their stance on the tough reforms it has called for after the October 28 parliamentary election. The Ukrainian government primarily seems bent on keeping their options open, and looks confident going ahead on their own without further IMF tranches at least through the rest of 2012 and as long as they can into 2013.