Ukraine To Start Negotiations With IMF On New Lending Program Before Old Expires

The National Bank of Ukraine states that it is time Ukraine enters into negotiations with the International Monetary Fund (IMF) to agree on a new lending program prior the current one has expired.

Press service of the NBU has said this in a statement, Ukrainian News Agency reports.

As the NBU explained in the statement, without bankrolling from international financial establishments for the state debt worth USD 20 billion guaranteed by the state and expiring in 2018-2020, Ukraine would unlikely be able to meet its financial obligations.

The NBU also stated in the second half of 2017 there no considerable shifts in the macroeconomic environment.

The volatility of the exchange rate was moderate.

The inflation was higher than the outlook produced by the NBU at the start of the year, exceeding the benchmark set by the Regulator.

In order to avert the inflation risks in the last three months of the year, the NBU had to raise the discounting rate twice each time approximately by two percentage points to 14.5%.

According to the NBU, those decisions would not to affect the lowering trend of the discounting rates in the long-term perspective.

After getting rid of the flawed banks, the NBU expects the banking sector to emerge reinvigorated and profitable once again.

One of the last hurdles expected by the Regulator is the banks switching to the International Financial Reporting Standards (IFRS-9) starting from 2018.

The Regulator said this transition could considerably affect the banks' equity.

The impact to the registered capital will be felt to a lesser degree.

As Ukrainian News Agency earlier reported, the IMF approved the Extended Fund Facility program (EFF) worth USD 17.5 billion for Ukraine starting from March 2015 and expiring in March 2019.

Ukraine received the first tranche of USD 5 billion in March 2015, the second tranche of USD 1.7 billion in August 2015, the third tranche of USD 1 billion in September 2016, the fourth tranche of USD 1 billion in April 2017.

The Finance Ministry expected Ukraine to attract additional USD 3.5 billion from the IMF in 2018.

The IMF stated that in order to continue the cooperation, Ukraine must make goods on several key promises, in particular, to pass a law on privatization, to create an anticorruption court, to up gas prices and to carry out a land reform.