Life without IMF tranches: hryvnia might drop below UAH 30 to dollar

"If before the end of the second quarter of 2018 and the beginning of the political campaign we fail resume cooperation with the International Monetary Fund, we can forget about hryvnia stability. If there is no cooperation with the IMF, the rate will clearly exceed the level of UAH 30 UAH to the dollar, and it is hard to say where it may stop," he said.

According to Fiala, if Ukraine continues cooperation with the IMF, the hryvnia rate until the end of next year will remain within the range of UAH 26-29 / USD.

"Even this year, when we received an IMF tranche, and the political campaign has not yet begun, we already see the hryvnia devalued 2.5% against the dollar," the expert said.

Read alsoUkraine's central bank seeks to start talks on new IMF program in 2018As reported earlier on Tuesday, a dollar in Kyiv exchange booths fell to UAH 28.2-28.4, while on December 18 it was up to UAH 28.8. According to experts, the current devaluation of the hryvnia was predictable and is associated with an increase in budget payments at the end of the year.

Deputy Spokesman for the IMF, William Murray, at a Washington briefing December 14 said that the Fund had not yet scheduled its mission’s arrival in Ukraine to review the cooperation program to subsequently decide on the allocation of another tranche since the Ukrainian side had not fulfilled all conditions to complete such revision. 

The same day, Deputy NBU Governor Oleh Churii said that the regulator expected the arrival of another IMF mission to complete the revision of the cooperation program in January 2018, and expected in 2018 to receive two credit tranches to the tune of $3.5 billion in the framework of the program with the International Monetary Fund. At the same time, the National Bank expects to receive the next tranche as early as in the second quarter of 2018.

Read alsoIMF insists on Ukraine adjusting gas pricesThe IMF in March 2015 approved a four-year Extended Fund Facility (EFF) loan program for Ukraine under which $17.5 billion will be disbursed. Ukraine has already received four disbursements from the Fund to the tune of $8.7 billion.

The allocation of the next credit tranche was expected back in September, but Ukraine failed to fulfill a number of mandatory conditions for the program revision, including the adoption of laws on pension reform and privatization, as well as on the anti-corruption court. The IMF is still assessing the pension reform adopted by the Verkhovna Rada in terms of incentives for late retirement.