Resolving Ukraine’s economic woes will be back on the agenda for the IMF today, as it re-starts talks with the country over a $17bn loan. It is hoped that the talks will see more funds released from the loan, so that the country can restructure its economy and repay some of its international debts.
The Ukrainian parliament has made a considerable effort in showing to the IMF that it will put the money to
good use
Originally agreed last April, Ukraine has so far only seen around $5bn from the IMF, as the organisation waits to receive reassurances from the government in Kiev that it is serious about reforming its economy. After adopting its budget for this year in December, the Ukrainian parliament has made a considerable effort in showing to the IMF that it will put the money to good use.
Prime Minister Arseniy Yatsenyuk faces a difficult year ahead, with economic woes exacerbated with the conflict arising from Russia and the east of the country. While the country’s economy has trudged along over the last year thanks to its foreign exchange reserves, it is thought these are quickly running out.
Many observers think that even if today’s talks over the next wave of payments from the IMF – thought to be around $3bn – are successful, it will still not meet the obligations of Ukraine’s government. These amount to around $20bn, and it’s thought the country is still most likely to be heading towards a default before the end of 2015.
This week, the FT revealed the country’s bonds had fallen to a record low. In partnership with the IMF, the FT showed that Ukraine’s economy may have retracted by as much as eight percent last year. They study suggests that the Ukraine’s debt-to-GDP ratio would probably be around 90 percent for this year, which is more than double the level that the IMF typically sees problems arising.
