Ukraine says IMF funding may resume a quarter later than expected

Wednesday, May 4, 2016 - 13:52 (EEST) Section: Latest news

The National Bank of Ukraine (NBU) expects that cooperation with the International Monetary Fund (IMF) will resume, but its official funding is forecast to be rescheduled for a quarter later.
The NBU has drawn such conclusions following debates on updated macroeconomic forecasts and recent changes in the regulator`s monetary policy, which were attended by foreign experts and market players, the NBU said in an announcement on its website.
The NBU said that it had retained its real GDP growth forecast at 1.1% in 2016 and at 3% in 2017. It also did not change its inflation forecast, keeping it at 12% for the end of 2016 and 8% for the end of 2017.
The NBU said its new forecasts would depend on the situation in the country`s east, the yield of grain crops and bank deposit inflows.
At the same time, the central bank expects that prices of raw materials will be higher than it mentioned in its previous forecasts.
It said it had reviewed its forecasts due to more optimistic projections for economic growth in China and Russia.
As UNIAN reported earlier, the IMF-Ukraine four-year Extended Fund Facility program worth about $17.5 billion originally foresaw quarterly revisions of the program, the issue of four tranches to Kyiv in 2015, another four in 2016. However, at present, the country has received only the first tranche worth $5 billion on March 13, 2015, and the second one worth $1.7 billion arrived on August 4, 2015.
The second review is currently under way, as Ukraine and the IMF are in talks on a large range of issues, including monetary, banking, anti-corruption policy, pension reform, and privatization. The result of the review should be a memorandum, which is to be approved by the Ukrainian government and the IMF`s Executive Board.
The endorsement of the memorandum will pave the way for the third tranche worth $1.7 billion. The arrival of the third tranche will also let Ukraine additionally raise $2.3 billion in financial aid: $1 billion in guarantees from the U.S. government and loans from the European Union and the World Bank.
Early in April, the IMF reviewed its macroeconomic forecasts for Ukraine in 2016, having set economic growth at 1.5% and inflation at 15.1%. However, it kept its projections for unemployment in Ukraine at 9.2% (in keeping with the International Labour Organization`s methodology).