REUTERS

Ukraine in 2021 will receive only one disbursement from the International Monetary Fund (IMF) under the current cooperation program.

This is stated in a forecast by Fitch Ratings.

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"Fitch also assumes for 2021 one IMF disbursement of US$0.7 billion, US$1.5 billion of other official financing, higher Eurobond issuance than the planned US$1.4 billion, and a 0.2% of GDP drawdown on fiscal reserves," the rating agency said.

The agency notes that the completion of the first review of the program carries significant risks.

"In particular, parliamentary approval for anti-corruption and judicial reform legislation will be challenging. IMF prior actions in these areas were partly a response to Constitution Court rulings in 4Q20 that restricted the powers of the national anti-corruption agency and withdrew criminal liability for false asset declarations. We see somewhat less implementation risk to the other significant new SBA [Stand-By Arrangement] requirement to reverse December's imposition of a temporary cap on gas prices," it said.

The rating agency says there would be greater political impetus to legislate remaining prior actions in 2H21 as the need for at least staff-level SBA approval to unlock other official and external financing would become more acute (with US$2.2 billion external amortization in September and a spike in budget funding need towards year-end).

"Government cash holdings of US$3 billion (US$1.8 billion in foreign-currency), a lighter repayment schedule over the next six months, and available domestic liquidity provide some financing space," it said.

IMF in Ukraine

  • On June 9, 2020, the IMF's Executive Board adopted an 18-month Stand-By Arrangement (SBA) worth SDR 3.6 billion, or about US$5 billion, aimed at helping Ukraine overcome the consequences of the COVID-19 pandemic.
  • On June 12, Ukraine received the first IMF disbursement worth US$2.1 billion under the SBA.
  • In late November, the Finance Ministry reported on the successful completion of talks with the IMF on benchmarks of the draft budget for 2021, which was one of the major prerequisites for starting the SBA review.
  • On January 11, 2021, an IMF mission resumed work in Kyiv, they worked until February 12 but departed without any decision on the SBA review.