The National Bank of Ukraine (NBU) expects the International Monetary Fund (IMF) to open new Extended Fund Facility for Ukraine by the end of this year and, taking this into account, draws its improved forecasts of macroeconomic growth and increase in international reserves, NBU Governor Yakiv Smolii has stated.
“The macro forecast we made public provides for the signing of an agreement with the IMF this year and the tranche this year,” he said at a briefing at the National Bank.
Smolii said that at this stage of negotiations with the fund, the scope of the program is not discussed, so it’s premature to talk about the possible amount of the first tranche.
In a release on improving the forecast for economic growth and reserves, the National Bank said that the IMF program would allow Ukraine to receive other official financing, improve conditions for access to international capital markets, and also support investor interest in Ukrainian assets.
“As a result, the volume of international reserves, despite significant payments on external debt, will fluctuate at around $23-24 billion this and in subsequent years, which is enough to finance future imports during three months,” the National Bank said in a statement.
The NBU raised its forecast for GDP growth this year from 3 percent to 3.5 percent, next year from 3.2 percent to 3.5 percent, and in 2021 from 3.7 percent to 4 percent.
“Accordingly, the key risks for the implementation of this macroeconomic forecast, in particular, inflation reduction to the target [5 percent] in 2020, is the delay in signing a new program of cooperation with the IMF and increasing threats to macro-financial stability, primarily as a result of decisions of Ukrainian courts,” the regulator noted, without directly mentioning in the release legal disputes over the nationalization of PrivatBank.
