After a long pause, Ukraine receives new loan tranche from the IMF

On Monday (Oct. 22), the executive board of the International Monetary Fund granted Ukraine a loan tranche of $700 million under its Stand-By Arrangement (SBA) programme agreed last June (BOFIT Weekly 2020/25). The $5 billion SBA was supposed to last until the end of 2021, but has now been extended to June 2022. Under the current SBA, Ukraine has borrowed of $2.8 billion. Prior to the latest loan tranche, Ukraine owed the IMF a total of $9.3 billion, or about 5 % of Ukraine’s GDP. The country’s public debt equals roughly 54 % of GDP.

The release of the latest tranche was conditioned on e.g. Ukraine’s ability to ensure central bank independence and sustainable fiscal policies in a way that protects the position of society’s most vulnerable groups. In October, the IMF predicted that Ukraine’s GDP would grow by 3.5 % this year. Given that Ukraine’s GDP contracted by 4 % last year due to the covid-19 pandemic, it is not expected to recover to its pre-pandemic GDP level until the early part of 2022. The IMF sees GDP growth of 3.6 % in 2022. According to the average of forecasts compiled by the Consensus Economics, Ukraine’s GDP should grow by 3.4 % this year and 3.7 % next year.

The hryvnia has appreciated against the euro this year

Sources: National Bank of Ukraine and BOFIT.