The head of the National Bank of Ukraine Yakov Smoliy appreciates the negotiations that are underway in Kyiv on 6 September with the mission of the International monetary Fund (IMF) on the possibility of obtaining regular funding.
“Negotiations with the IMF are continuing. The mission completes its work next week, and we expect a positive decision on the continuation of cooperation,” he told reporters on the sidelines of the 15-th YES forum, organized by the Victor Pinchuk Foundation in Kiev.
Answering questions about aspects of this cooperation, by J. Smoliy said that the continuation of the Fund of financial support of Ukraine is an important element.
“Replenishment of foreign exchange reserves is the key to macro-financial stability”, – stressed the head of the national Bank.
As reported, the IMF mission headed by Ron van Roden began work in Kiev on 6 September and plans to work on 19 September “to discuss recent economic developments and economic policy”.
Acting Minister of Finance Oksana Markarova announced the intention of the Ukrainian side to discuss with the Fund as all the current issues and the continuation of cooperation after the end of the current EFF program in March 2019. One option is the adoption at the conclusion of EFF the shorter the stand-by program that would give additional guarantees of stability for the elections in 2019.
According to O. Markarova, successful fourth review of the extended Fund IMF and receiving the fifth tranche of $2 billion, will pave the way for attracting financing to the state budget on preferential terms using world Bank guarantees $800 million, as well as to receive macrofinancial assistance from the EU to EUR1 billion.
Open the IMF in March 2015 the four-year EFF program total amount of SDR12,348 billion (about $17,24 billion at current exchange rates) with the first tranche of $5 billion originally envisioned by the quarterly revision of the program, the allocation in 2015 of three more tranches of SDR1,18 billion ($1.65 billion) and a decrease in quarterly tranches in 2016-2018 to SDR0,44 billion ($0.61 billion). Ukraine was able to obtain a small delay in the second tranche for this program to $1.7 billion in early August 2015, and then there was a long pause in connection with the failure of a number of conditions, political crisis and change of government.
After the arrival of the new Cabinet, headed by Volodymyr Groisman in April 2016, the negotiations on the continuation of funding resumed, however, the Fund decided to allocate the third tranche of $1 billion only in mid-September, the fourth – 3 April 2017.
From July 2017, Ukraine is in a difficult negotiation process with the IMF on the gas issue: Fund insists on raising gas prices for the population, which, according to various estimates, can range from 30% to 60% in connection with growth of prices on international markets, while Prime believes that the sharp rise in unjustified. Currently discussing the possibility of gradually increasing gas prices to increase them by about 25% at the first stage.
The managing Director of the Fund Christine Lagarde on 19 June 2018, said that the implementation of the preconditions concerning the price of gas is critically important for completing the current review of the IMF-supported program. According to her, another precondition is adherence to the budget deficit.