USD 1 bln loan guarantee contingent on IMF program, Biden says

U.S. Vice President Joe Biden told Ukrainian President Petro Poroshenko during a Nov. 6 telephone call that the U.S. is still willing to provide a third USD 1 bln loan guarantee to Ukraine, reported the Vice President’s office. However, it must be based on continued Ukrainian progress to investigate and prosecute corruption and ensure that Ukraine’s tax reform is consistent with its IMF program, Biden said.

Recall, Deputy Finance Minister Ihor Umanskiy announced on Nov. 4 that negotiations with the IMF will continue only after the tax reform project and 2016 draft budget are developed and submitted for the Fund’s further review.

Alexander Paraschiy: Biden’s message means that both IMF money, as well as an initially scheduled USD 1 bln in U.S.-guaranteed Eurobonds, will not arrive in 2015. We expect the tax reforms and 2016 budget will be only approved at the end of December, leaving no time for disbursing the loans. Additionally, we do not see any substantial sources of foreign currency inflow in the next two months, which means that gross international reserves will likely remain close to the current level of USD 13 bln by the year end.