| UKRAINIAN DELEGATION TO MEET IMF NEXT WEEK IN WASHINGTON |
High level meeting scheduled; analysis by Tim Ash, RBS; Ukraine owes IMF $3.7 billion in 2012 Thursday, January 19, 2012 UKRAINE BUSINESS NEWS - THREE ARTICLES 1. UKRAINIAN DELEGATION TO MEET IMF NEXT WEEK IN WASHINGTON KYIV – A Ukrainian delegation will visit Washington on January 24 to meet with the management of the International Monetary Fund (IMF), Ukrainian Premier Mykola Azarov has said during a meeting with Special Envoy of the United States Secretary of State for Eurasian Energy Richard Morningstar. "On January 24 we will send our delegation to Washington to meet with the IMF. We want to hold another round of talks, and we expect to achieve mutual understanding with the management of the fund," the government's press service cited Azarov as saying. The Ukrainian premier also said that he hopes for the assistance of the U.S. to Ukraine during the resolving of controversial issues with the IMF. As reported, after the presidential election and government reshuffles in Ukraine in early 2010, the 2008 Stand-By Agreement (SBA), under which Ukraine received $11 billion, was suspended. In late July 2010 the IMF decided to renew its loan partnership with Ukraine through a new SBA worth SDR 10 billion (about $15.6 billion). In late July 2010, Kyiv received the first tranche of SDR 1.25 billion under the new program. The IMF decided in December 2010 to allocate a second tranche worth SDR 1 billion. The program foresaw future quarterly allocations of eight more tranches starting from the middle of March 2011 in the case of there being further successful cooperation. However, an IMF mission that worked in Kyiv in March 2011 could not recommend to the IMF Executive Board that it approve a new tranche for Ukraine. The IMF had expected Ukraine to approve pension reform and settle the problem of low prices of natural gas for households. On November 4, 2011, an IMF mission released an announcement after its work in Kyiv from October 25 to November 3, 2011, according to which the mission had taken a pause to carry out additional technical work. 2. UKRAINE DELEGATION TO GO TO WASHINGTON FOR IMF TALKS ANALYSIS & COMMENTARY: Timothy Ash, Royal Bank of Scotland, London, UK, Jan 19, 2012 LONDON: Surprise, surprise! The Ukrainian side are clearly now trying to improve their leverage with Russia, having previously burnt their bridges with the EU/IMF, and aiming still to cut a cheap energy deal with the Russians. The IMF will likely demand a hike in gas prices as the price for any deal...the government is now probably thinking that if they start talks with the IMF, these will drag on a bit, but by the time any deal is agreed the 2011/12 heating season will be over, and they wont have to implement gas price hikes until April/May when the population wont really feel the impact...so the government will have bought some time in the run up to the October 2012 parliamentary elections. I also wonder if the IMF will demand greater FX flexibility (read weakness) as the price of any deal, given the widening current account deficit and concern over external financing from the weight of external liabilities falling due over the next year. It will also be interesting to see if any IMF key shareholders look to wring some political concessions from the government to begin IMF negotiations, i.e. the freeing of the main opposition leader, Yulia Tymoshenko from jail - note that the IMF have been working much more closely with the EU/EC of late on these kind of issues in Europe (e.g. Hungary). Parliamentary elections will be pretty meaningless with the leader of the main opposition party languishing in jail on charges that the EU/US have indicated are politically motivated. ------------------------------------------------------------------------------- 3. UKRAINE TO PAY IMF $3.7 BILLION IN 2012 KYIV - Ukraine is scheduled to pay the International Monetary Fund (IMF) 2.433 billion SDR ($3.719 billion at the current exchange rate) this year, including 199 million SDR worth of interest, IMF materials say. The main payments fall in the first part of August - 655.7 million SDR, and another 926.3 million SDR is to be paid in the period from October 30 to Nov. 12. Major payments are also planned for the first weeks of February and May - 428.4 million SDR and 423.2 million SDR, respectively. Kyiv is to increase its payments to the IMF to 3.77 billion SDR in 2013. Payment will go down to 2.418 billion SDR in 2014 and to 977 million SDR in 2015. Ukraine paid it 230 million SDR in 2010 compared with 157.7 million SDR paid the year before, as principle debt was not repaid these years, the IMF said. IMF financing for Ukraine dried up to zero last year from 2.25 billion SDR in 2010 and 4 billion SDR in 2009. In the fall of 2008, the IMF decided to disburse about $17 billion to Ukraine under a stand-by program. Under the 2008 SBA, Ukraine received only three tranches worth almost $11 billion. The allocation of the fourth tranche, worth $3.8 billion, was scheduled for November 2009 following the third review of the IMF's cooperation program with Ukraine. However, it did not issue a positive statement on the completion of the review, and Ukraine never received the fourth tranche. After the presidential election and government reshuffles in Ukraine, the 2008 SBA was suspended, and the IMF decided to renew its loan partnership with Ukraine in the summer of 2010 through a new SBA worth SDR 10 billion (about $15.6 billion). In late July 2010, Kyiv received the first tranche of SDR 1.25 billion under the new program. The IMF decided in December 2010 to allocate a second tranche worth SDR 1 billion. The program foresaw future quarterly allocation of eight more tranches starting from the middle of March 2011 in case of further successful cooperation. However, an IMF mission that worked in Kyiv in March 2011 could not recommend to the IMF Executive Board that it approve a new tranche for Ukraine. The IMF had expected Ukraine to approve pension reform and settle the problem of low prices of natural gas for households. On Nov. 4, 2011, an IMF mission released an announcement after its work in Kyiv from Oct.25 to Nov. 3, 2011, according to which the mission had taken a pause to carry out additional technical work. Discussions of economic policy in Ukraine are expected to begin again soon. Read more: http://www.kyivpost.com/news/business/bus_general/detail/120752 |
