The IMF won’t lend.
Ukrainian economy is recovering, the situation on global commodity markets favorable, the budget is reduced to a cash surplus, the government goes to external credit markets, foreign exchange reserves of the national Bank grow, the hryvnia exchange rate fluctuates in a narrow corridor.
Against this positive background, more clearly heard campaign rhetoric of the Ukrainian authorities. And with it the reluctance to carry out unpopular or disadvantageous for certain groups of obligations to the IMF and other international creditors.
Whether Ukraine can completely abandon the IMF? Very unlikely.
The problem of external payments in 2019 will not go away. The Ministry of Finance was able to slightly reduce the volume of payments, partially exchanging Eurobonds maturing in 2019 and 2020 on a more long-term bonds maturing in 2032-m.
But radically the situation has not improved. In the next three years the public sector need to pay $16 billion principal amount of external debt and interest on it. About $4 billion in 2018, another $6 billion in 2019 and two in 2020. The total amount paid is comparable to foreign exchange reserves of the NBU in the amount of $18.6 billion.
Thus, the lion’s share of the foreign payments should be made from the reserves of the national Bank, and from the accounts of the government. Totaling $12 billion, including $3.2 billion next year, another $4.4 billion in 2019 and two in 2020.
Due to the recent issuance of sovereign Eurobonds, moderate external debt payments this year and the confiscation of monetary assets of Yanukovych’s entourage, the government managed to create a small stock of foreign exchange liquidity. At the end of September in the government accounts in the Treasury and the state banks had about $2.5 billion will be enough to Fund payments on foreign debts until the middle of next year. But then foreign currency will need to re-borrow on international markets, Ukrainian banks, the official creditors.
No “umbrella” in the form of the IMF, the budget to attract enough foreign funds to cope with rising external debt payments, it will be difficult and expensive.
The IMF does not intend to lend to the government. He returned to the traditional practice of providing funds to support the reserves of the Central Bank. And international organizations that provide the cheap government funding, and did not make a step without a working IMF program.
Foreign investors are also unlikely to be willing again to lend to Ukraine, while the prospects of cooperation with the Fund remain unclear. Although global credit markets are in positive mood, a recent issue of Eurobonds of Ukraine took place only because investors believe in the imminent release of the next tranche of the IMF. Ukrainian banks can agree to lend the currency to the government, but their resources are limited to a few billions of dollars.
The authorities have a few months to peredogovarivatsya with the IMF on the conditions of allocation of the next tranche without negative consequences for the economy. But propetlyat until after the election without the support of the Fund is unlikely. Understand this, and in the IMF, ambiguously hinting that on the election still too early to think and not to go with them on the concessions needed reforms. That first of all Ukraine needs.
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