The International Monetary Fund (IMF) has estimated the level of Ukraine's public debt as acceptable, IMF Resident Representative in Ukraine Max Alier said at the second Raiffeisen Private Wealth Forum in Kyiv on Tuesday.
"The default we were talking about did not happen… This happened due to [the government’s] proper policy… If you look at the ratings, they are evidence of two things – the opportunity and commitment to pay [on Ukraine’s foreign debt]. In terms of Ukraine’s public debt, I would say that it has increased significantly over the past two years, but it’s not so high – about 40% of GDP. I see no reason for default here," he said.
Alier also noted that it was important for the country to conduct pension reform, resolve the problem of understated gas tariffs for households and reduce the level of energy consumption.
The IMF decided to renew its loan partnership with Ukraine in the summer of 2010 through a new stand-by arrangement (SBA). The approved stand-by program for Ukraine is 10 billion in special drawing rights (SDR, around $15.6 billion), which is the IMF’s third biggest assistance program following those for Greece and Romania. In late July 2010, Kyiv received the first tranche of SDR 1.25 billion. The IMF decided in December 2010 to allocate a second tranche worth SDR 1 billion.
The program foresees future quarterly allocations of eight more tranches each worth SDR 1 billion, with the exception of the last tranche, which will be worth SDR 750 million.
However, an IMF mission that worked in Kyiv in March 2011 could not recommend to the IMF Board of Directors that it approve another tranche for Ukraine. The IMF expects Ukraine to approve pension reform and settle the problem of low prices of natural gas for households – measures required for it to get the third tranche under the SBA.
