KYIV (Reuters) – Ukraine expects to receive $2.2 billion spread across three tranches from the International Monetary Fund in 2021, Central Bank Governor Kyrylo Shevchenko told Reuters in an interview on Monday.
His comments are the first time a senior Ukrainian official divulged Kyiv’s expectations since IMF loan talks restarted in December after the programme was derailed last year due to concerns over the pace of reforms.
Shevchenko also disclosed for the first time that the government was planning to issue Eurobonds worth about $2.4 billion in 2021.
“We expect three tranches, SDR 0.5 billion each, for a total of about $2.2 billion this year, and the rest of the money in 2022,” Shevchenko said.
The IMF approved a $5 billion programme last June to support Ukraine’s economy as it fell into recession due to the coronavirus pandemic.
“The mission’s work continues…Based on the results of this week it will be clearer what agreements we are reaching,” Shevchenko said when asked whether Kyiv could anticipate receiving money by the end of the first quarter.
He said the central bank was fulfilling its IMF commitments, playing down concerns over the central bank’s independence that were spotlighted last year when his predecessor resigned citing political interference.
But he said parliament may need to pass some draft laws as conditions for more loans, without specifying which ones.
He said the authorities did not discuss a possible extension of the 18-month programme, following media reports that Ukraine had asked for this.
The central bank also expects foreign portfolio investors will bring in about $1 billion by buying government bonds in the domestic market this year.
“There is a new optimism in international markets…We hope that this optimism will not bypass Ukraine,” said Shevchenko.
In January, the central bank kept its key interest rate unchanged at the historically low level of 6% despite rising inflation, which the bank predicts will rise to 7% in 2021 compared to a target of around 5%.
Shevchenko said that in real terms interest rates were negative, as they were below the rate of inflation, as a way to stimulate economic growth.
However, the central bank is ready to increase the rate to return inflation to the target range, Shevchenko said.
“We would like all market players to know clearly that we will react immediately if we see further strengthening of fundamental inflationary pressures…The rate will be changed.”
(Editing by Matthias Williams and Mark Heinrich)
