10 March 2021, Wednesday, 12:27 169

Ukraine Pays IMF USD 4 Million In Interest For Undrawn Tranches In 2020

Редактор: Daria Zubkova

Ukraine paid the International Monetary Fund USD 4 million in interest for undrawn tranches in 2020.

Ukrainian News learned this from the National Bank of Ukraine.

Under the terms of the loan program with the IMF, the borrower - Ukraine - pays, in addition to interest on the tranches received, and a fee for the unreceived tranches called a Commitment fee.

The commitment fee's size depends on the amount of the country's loans from the IMF and the size of its quota.

In 2020, the fee was 0.1% per annum from the amount of tranches to be received during the year.

But the amount of the fee is proportionally reduced and returned for the amount of tranches that were actually received.

The fee is paid at the beginning of each period of the funding program (usually 12 months) and only for those funds that can be received in this period.

If a country uses all tranches, the IMF returns the amount of the prepaid fee.

If it does not use all of them, the fee is referred to as expenses of the NBU at the end of the program.

That said, if Ukraine fulfills the conditions of the program and receives tranches, then the fee for the allocation of funding is returned and is not added to expenses.

In 2020, the NBU paid the Commitment fee of USD 8 million for the first 12 months of the new Stand-by 2020 program (the total amount of the program is equivalent to USD 5.2 billion).

Of the amount, the IMF returned USD 4 million for a tranche worth USD 2.1 billion used by Ukraine.

Accordingly, the amount of fee actually paid by the country amounted to USD 4 million, or 0.04% per annum of the average balance of debt to the IMF for the last year.

That is, the cost of borrowing from the IMF without the Commitment fee was 2.59% per annum in 2020, and together with a fee of 2.63% per annum.

A Commitment fee is charged exclusively during the period of provision of tranches under the program - after the country receives tranches and until the date of loan repayment, such a fee is not charged.

The matter of payment of the fee this year will be determined in May – June 2021, and its payments will be carried out until May – June 2022 and returned by the Fund upon receipt of tranches.

As Ukrainian News Agency earlier reported, Ukraine is to pay about USD 1.7 billion to the International Monetary Fund (IMF) in 2021.

The largest payments are scheduled for March 12 and September 13 at 295.5 million SDRs.

The last payments for the current year are scheduled for November 1 - SDR 43 million.

Ukraine received the first tranche from the IMF of USD 2.1 billion in June 2020.

In the period from December 21 to 23 and from January 11 to February 12, IMF specialists discussed with representatives of the Ukrainian authorities the progress in the implementation of measures and reforms, which are part of the government's action program supported by the stand-by agreement, after which the IMF Resident Representative in Ukraine Gosta Ljungman said that more progress is needed in reforms in favor of completing the first revision of the program of cooperation with Ukraine.

The Ministry of Finance is not considering the scenario of non-fulfillment of the IMF program.