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brought the deficit down to circa $300mn in December from just under $900mn a year earlier.
The state treasury has been running on fumes thanks to the delays in the crucial IMF tranches to support the macro stability of the country and the hryvnia. However, Ukraine struck new deal with the IMF in October 2018 , but saw its deal downgraded from an Extended Fund Facility (EFF) that runs over several years, to a Stand-By Agreement that has to renegotiated every year due to poor progress on reforms.
Thanks to the new deal with the IMF Ukraine has enough money to get through 2019 and meet its debt mountain of $17bn of debt obligations that come due by 2020, including $1.8bn due to the IMF this year that will come out of the $3.9bn the fund has promised to pay. In late December Kyiv received the first tranche of the IMF aid worth of $1.4bn and EUR500mn of European Union assistance. With the World Bank’s guarantees, the government also borrowed EUR349mn from Deutsche Bank. If the IMF programme stays on track, Ukraine will get a further $2.5bn from the Fund and more assistance from the EU and the World Bank this year.
The second and the third IMF tranches for 2019 of $1.3bn each under the SBA are planned to be disbursed after the completion of reviews scheduled for May 15 and November 15, respectively.
The central bank’s foreign currency reserves are at a four-year high of $20.7bn, strengthening expectations that the Ukrainian hryvnia would not weaken against the dollar by more than 5% by 2019-end.
However, investment and foreign direct investment (FDI) in particular are extremely low which is holding further progress back. At the same time the government estimates that some 5mn Ukrainians have left the country to find work in its EU neighbours, from a total active work force of 16mn. While the circa $10bn in remittances these migrant workers send home is very useful for the country’s balance of payments, the lack of this labour is also holding back faster growth.
6 UKRAINE Country Report February 2019 www.intellinews.com