Ukraine may borrow up to $15bn from IMF

17:11, 16 October 2008
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Ukraine may sign the agreement as soon as next week

Ukraine may borrow between $10bn and $15bn from the International Monetary Fund to “strengthen its position” during the global financial crisis, the country’s deputy Central Bank governor Oleksandr Savchenko, said on Thursday as an IMF delegation arrived Kyiv, Financial Times reported.

“We may not need all of the sum. We’re now meeting with IMF representatives, examining the situation, and are deciding how much money we need.’’ Mr Savchenko said in a telephone press conference.

Ukraine may sign the agreement as soon as next week, added Mr Savchenko, who headed the country’s delegation at the IMF’s annual meeting in Washington last week.

Officials in Kyiv said they were seeking to shore up confidence in their under-pressure economy. But they insisted that the economy remained in good shape, accusing western experts of exaggerating the risks facing Ukraine, and saying the IMF delegation would be in Kyiv for one week “to personally study the situation”.

Bogdan Danylyshyn, economy minister, said: “Altogether, Ukraine’s macroeconomic situation is not dangerous.”

Economists suggested that Ukraine’s government may seek a credit facility to fill a widening current account deficit left by sharp declines in the prices of steel; credit-financed import increases; and rising prices for gas imports. In the first half of this year the deficit rose to 7.9 per cent of gross domestic product from 4.2 per cent last year.

Heavy borrowing by Ukraine’s budding banking sector has swelled the country’s total foreign debt to some $100bn, according to July figures. Of, this, just $15bn is government debt. Foreign exchange reserves stand at $37.5bn.

Ali Aleyd, an emerging markets economist at Citigroup, said “external financing requirements for Ukraine next year could total $55-66bn, assuming all maturing external debt must be repaid. I think Ukraine would benefit from IMF help to bring further creditability to the policy framework that is required to adjust the country’s imbalances.”

Financial Times

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