Page 12 - UKRRptDec20

“It's a typical Ukraine story: two steps forward, one step backwards,” says Sleptsova.
“I was going to use exactly the same words, except to say actually we are in a phase now where its more like: one step forward, two steps backwards,” Ribakova added.
OK for now
Ukraine is ok for now. It has $26.6bn in gross international reserves (GIR), which is equivalent to 4.4 months of import cover – more than the minimum needed to maintain the stability of the hryvnia which is trading at UAH28.4 as of November 25.
And it has met most of its debt repayment obligations for this year with another c.$3bn due in the first quarter of next year and c.$1.5bn in the second quarter. All-in-all Ukraine has a total of $14.5bn of debt to redeem in 2021.
At a pinch the government can finance some of that from its reserves without doing too much damage to the exchange rate nor inflation, but not all. The problems start in the third quarter as the debt that was restructured five years ago in the post-EuroMaidan protests that lead to the change in government come due.
The other problem is the new 2021 budget is just being finalised and has a 6%of GDP (UAH270bn or $9.5bn) deficit as the government spends heavily on stimulus to repaid the damage done by the coronacrisis. (Kyiv initially agreed a 4%-5% deficit and the final amount remains the object of discussion.) Without a working IMF programme the state is going to struggle fund this deficit.
Ukraine was plunged into a political crisis after Constitution Court nix several anti-corruption laws, including the criminal liability from lying on an annual mandatory income e-declaration all public employees are required to fill in that was implemented at the insistence of the IMF as one of the strings attached to Ukraine’s $5bn Stand By Agreement (SBA). As a result the IMF programme has been de facto suspended.​ ​Ukraine has already received $2.1bn in June from the IMF​, but it is now clear that the next tranche of $700mn due now has not, and will not, arrive before the end of the year.
“With the budget still under consideration in the Verkhovna Rada (second reading in early December), we no longer expect any IMF disbursements before the end of the year,” says Ribakova.
As a result, authorities will need to rely more on domestic financing of the fiscal deficit. Ukraine has had some luck a the current account is looking good thanks to falling oil prices and remittances have held up surprisingly well with a total of about $10bn expected to be sent home from abroad this year by migrant workers.
Next year doesn't look as good
“Considering the significant swing of the current balance to surplus in 2020 ($4.2bn over Q1-Q3), external pressure has declined sharply, and upcoming debt amortization can be met from reserves. We believe that Ukraine will be
12​ UKRAINE Country Report​ December 2020 ​ ​www.intellinews.com