IMF mission to visit Ukraine on December 6, says Azarov
A mission of the International Monetary Fund (IMF) will arrive in Ukraine on December 6, Ukrainian Prime Minister Mykola Azarov has said.
"The term of our cooperation program with the IMF is coming to an end. A mission of the IMF will come to Ukraine on December 6," he said at a press conference in Oslo on Friday.
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 at a regular press briefing in Washington on Thursday night, while commenting on reports that an IMF mission could arrive in Kyiv on December 6.
Asked by journalists to update them on the economic situation in Ukraine and the country's need in terms of the fund's financing, Rice recommended everyone consult the fund's latest Staff Report for the 2012, Article IV, on the consultations with the Ukrainian authorities that were held in June 2012.
According to the report, Ukraine's gross reserves will drop to 2.6 months of next year's imports of goods and services by the end of 2012, from 3.6 months in late 2011 and 4.2 months in late 2010. At the same time, the National Bank of Ukraine (NBU) stated that the country's reserves would remain at the level of three months of imports, which is acceptable.
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 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.
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.
