Yevhen Hrebeniuk, Senior Equity Analyst at Troika Dialog Ukraine
The International Monetary Fund's executive board has completed its second review of Ukraine under the standby loan arrangements and has decided to extend the third tranche of $3.3 bln. The total amount disbursed to Ukraine now stands at $10.9 bln.
The board also modified the performance criteria, softening the budget deficit target to account for the difficult situation at Naftogaz Ukrainy.
Although the approval of the third tranche had been expected since the IMF staff recommended such a move after its last visit to Ukraine, the decision nonetheless sends a positive signal to the markets, especially given the recent hryvnia exchange rate volatility on the interbank market.
And while the hryvnia will remain under devaluation pressure, the disbursement of the third tranche will help the National Bank pass through a period of heavy external debt payments in the third quarter of 2009.
On a positive note, the Ukrainian authorities and policymakers exhibited a high degree of cooperation prior to approval of the third tranche by passing key pieces of legislation to restructure the banking sector, as required by the IMF.
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