Ukraine Sees $7 Billion IMF Funding This Year
Ukraine will probably receive $7 billion in International Monetary Fund financing this year to support the state budget and central bank reserves, Finance Minister Oleksandr Shlapak said.
The east European nation is also seeking further funding from the Group of Seven countries, Shlapak said an interview in Washington yesterday. Of the groups members, Canada has pledged $200 million and the U.S. has also responded, he said.
The government predicts Ukraines economy will shrink 3 percent in 2014, the third recession since 2008, while reserves are at a nine-year low. The country sealed a preliminary accord with the IMF last month for as much as $18 billion in loans during two years, with the agreement unlocking $27 billion in international financing. Ukraine needs about $30 billion through 2015 to balance the situation, Shlapak said.
News from the IMF/World Bank Spring Meetings:
We have fulfilled all preliminary requirements we have agreed with the IMF, Shlapak said. Tomorrow, we will report that to our IMF colleagues.
The hryvnia has weakened 35.2 percent against the dollar this year, the worst performance among more than 170 currencies tracked by Bloomberg. It depreciated 0.9 percent to 12.7109 per dollar as of 10 p.m. in Kiev.
As to its adequacy, well need more than the numbers the IMF are currently looking at I believe in Ukraine, said Canadian Finance Minister Joe Oliver today in Washington. This is an issue subject to continual study and review.
The currency will rebound after the IMF deal is completed, Shlapak said. Ukrainian officials will meet IMF Managing Director Christine Lagarde on April 14 and the government hopes the lenders board will convene to approve the loan this month, he said. Ukraine wants to get the funds as soon as possible, he added.
While we announced the $27 billion, which is the financing need of the country for the next 24 months, we have also given a range for the financing that would come from the fund, and that range has been $14 to $18 billion, IMF European Director Reza Moghadam said today in Washington. Our exact financing will depend on how much comes from other bilateral and multilateral lenders.
The hryvnia plunged during almost five months of political turmoil, including deadly street clashes in Kiev in February and the Russian annexation of the Crimean peninsula from Ukraine in March. President Vladimir Putin yesterday threatened to halt gas supplies to Ukraine because of the countrys debt, while NATO says that about 40,000 combat-ready Russian troops are massing along the countries border.
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