12:13 20.12.2018

New IMF's SBA to contribute to macrofinancial stability in Ukraine, payments on external debt – bankers

2 min read
New IMF's SBA to contribute to macrofinancial stability in Ukraine, payments on external debt – bankers

The approval of the new 14-month Stand-By Arrangement (SBA) for $3.9 billion by the International Monetary Fund (IMF) for Ukraine will contribute to macrofinancial stability in the country and successful payments on external debt, according to bankers polled by Interfax-Ukraine.

"The launch of Ukraine's cooperation program with the IMF will provide the foundation for macrofinancial stability in Ukraine in 2019. Thanks to raising funds from the IMF and other international financial institutions, the task of refinancing large payments on Ukraine's external state debt has been practically solved. This will have a calming effect on the foreign exchange market at least until autumn 2019," Chief Analyst at Alfa-Bank (Ukraine) Oleksiy Blynov said.

At the same time, he added that after the first tranche of the SBA was received in the country and loan funds were raised under the World Bank's guarantee, the level of sufficiency in forex reserves would recover to 3.4 months of Current External Payments (CXP), which would be the highest since 2014. This will significantly increase market confidence in the hryvnia and reduce concerns about the sovereign risk of Ukraine.

Board Chairperson of IBOX Bank Halyna Kheilo said that the approval of the SBA indirectly reduces the risks of hryvnia devaluation and it is a positive signal for foreign investors.

Board Chairman of Piraeus Bank Serhiy Naumov, for his part, said that the granting of the IMF tranche, which would replenish the NBU's forex reserves, would at least prevent market anxiety and smooth out possible currency fluctuations.

Naumov also said that the resumption of cooperation with the IMF will help curb inflation.

As the banker said, the provision of the IMF tranche is a positive signal to investors, it is confirmation that the country is moving in the right direction and implementing reforms. At the same time, a significant increase in investment will not occur without the continuation of structural reforms in the economy, judicial and law enforcement systems.

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