BOFIT Viikkokatsaus / BOFIT Weekly 2018/51

At its meeting this Tuesday (Dec. 18), the executive board of the International Monetary Fund (IMF) voted to grant Ukraine a new Stand-By Arrangement (SBA). The 3.9-billion-dollar SBA will run for 14 months. It replaces Ukraine’s Extended Fund Facility approved in 2015 that was set to expire in March 2019. Under the new SBA, Ukraine gets immediate access to credit worth 1.4 billion dollars.

According to preliminary information, the other loan tranches will be released to Ukraine in May and November next year. The World Bank has also granted Ukraine 750 million dollars in loan guarantees. Ukraine last month received a 500-million-euro loan from the European Union after preliminary agreement was reached on the IMF’s SBA.

The SBA required Ukrainian authorities to accept a number of loan conditions. For example, regulated energy prices had to be increased to levels close to actual producer costs. The 2019 budget approved by Ukraine foresees a deficit corresponding to 2.3 % of GDP.

Before the new SBA was approved, Ukraine had 9.9 billion dollars in outstanding loans from the IMF. Ukraine’s 2019 debt-servicing costs to the IMF will be about 1.9 billion dollars. In total, nearly 5 billion dollars in Ukraine government foreign debt comes due next year.