IMF mission to come to Kyiv on December 7-17 to negotiate new Stand-By …

A mission of the International Monetary Fund (IMF) will start
negotiations on a new Stand-By Arrangement with the Ukrainian
authorities in Kyiv in December, the IMF Resident Representative Office
in Ukraine reported on Friday.

“At the request of the authorities, an IMF mission headed by Mr.
Christopher Jarvis will visit Ukraine on December 7-17 to initiate
negotiations on a new Stand-By Arrangement,” IMF Resident Representative
in Ukraine Max Alier said in a statement.

Earlier, Director of the IMF External Relations Department Gerry Rice
said that “the Ukrainian authorities have expressed interest in
resuming the program relationship with the IMF, though the specific
modality and conditions have not been discussed yet.”

“And we have not received a request from the Ukrainian authorities to send a negotiating mission,” he said.

In 2013 Ukraine will have to pay $6.43 billion (including $2.91
billion by the government and $3.52 billion by the NBU) to the IMF. In
2012 Ukraine paid the IMF around $3.93 billion, including $1.01 billion
from the government. In 2014-2015, Ukraine’s payments to the IMF, taking
into account possible new loans, are estimated by $4.2 billion per
year.

As reported, in late July 2010, the IMF decided to renew its loan
partnership with Ukraine through a new Stand-By Arrangement worth SDR 10
billion (over $15 billion). According to the NBU, the country succeeded
in getting two tranches for a total of $3.4 billion.

The new program was frozen at the stage of the second review in the
spring of 2011. For over a year, Ukraine has been trying to persuade the
IMF to drop its objections to the government’s subsidizing natural gas
tariffs for households until the completion of its gas talks with
Russia.

The current stand-by arrangement expires at the end of 2012.

The Ukrainian government thinks that it is reasonable to prolong the
current program with the IMF, and hopes to do this in late 2012 or early
2013.

In early November, Fitch forecast that Ukraine’s external financing
requirement would grow in 2013, as repayments to the IMF will rise to $6
billion.

Ratings agency Fitch believes this probably exceeds the government’s
capacity to borrow externally and will require partial refinancing by
the IMF itself. Without this funding, there is a risk that reserves will
continue to fall, and the hryvnia depreciate, which would likely
trigger a downgrade, the agency said.

As reported, a technical mission of the IMF worked in Kyiv from
October 26 to November 2, 2012 to discuss with the Ukrainian government
reform in the financial sector, particularly steps taken by the
authorities to solve problems related to bad loans. The sides also
discussed possible ways for the creation of more favorable conditions
for bank crediting and priority reforms that are to be implemented in
2013.