Blocked tranche. Ukraine again without the IMF money

Заблокировали транш. Украина снова без денег МВФ

IMF postpones consideration of the question of the allocation of a new tranche to Ukraine due to the blockade of Donbass.

The international monetary Fund postponed consideration of a question on allocation of next tranche to Ukraine.

President Petro Poroshenko and other officials promised that next week Ukraine will receive another $ 1 billion from the IMF, but now will have to wait.

The reason for the transfer – blockade of Donbass, which last week became official.

The Foundation wants to analyse the consequences of the blockade for the Ukrainian economy. has gathered information about changes in the decisions of the Fund.

A new date yet

The Board of Directors of the International monetary Fund had to consider the question of allocation of the fourth tranche of Ukraine on March 20. But the Ukrainian issue disappeared from the agenda of the meeting.

With a new date of the meeting of the Board of Directors on the Ukrainian question still undecided.

“The Board of Directors meeting, scheduled for March 20, was deferred to assess the impact of recent events on the programme of cooperation. The IMF expects to announce a new meeting date in the near future”, – stated in the message Fund.

To clarify the calculations

The Finance Ministry said that the postponement of the meeting due solely to the need to clarify calculations of the economic consequences of the blockade of Donetsk and Lugansk regions.

The national Bank of Ukraine plans to revise the forecast of macroeconomic indicators due to the blockade.

“To this end, on Monday, March 20, will be an extraordinary meeting of the Committee of NBU on monetary policy. Updated macroeconomic forecasts are provided by IMF. Dialogue and technical consultations with the IMF are continuing,” – the press service of the national Bank.

How many will lose – unknown

Despite the fact that the blockade the movement of goods across the line of demarcation lasts for a second month, detailed information on its impact on economic indicators from the government yet.

Earlier, Finance Minister Alexander danyluk said that the blockade, if it will last until the end of the year, may result in the loss of up to 2% of GDP. “We have a middle scenario – 1-1,3%, but it could be worse – up to 2% (of GDP losses from the blockade of Donbass)”, – said the Minister.

The national Bank less pessimistic – in the worst scenario, the blockade can slow economic growth by 1.3%, that is, given the current forecast of 2.8%, losses amount to 1.5% of GDP.

The state budget of Ukraine for 2017 envisages inflation at 8.1 percent. GDP growth for the year was to be not less than 3%. The IMF in their assessments was initially is less optimistic. The Fund predicted 2.5% GDP growth 8,5% inflation. Because of the blockade, these parameters became unrealistic.

What’s next?

Economists have repeatedly voiced the possible economic effects of the embargo. Was a possible loss of 1.5 to 4 billion dollars.

The Ukrainian government expects to obtain from the IMF $ 1 billion. This money could be used to replenish the gold reserve of Ukraine and to settle previous loans.

But the next tranche is also dependent on continued cooperation with other partners of Ukraine – the European Commission, the European Bank for reconstruction and development, the world Bank, the European investment Bank.

11 March 2015, the IMF approved a lending program of Ukraine’s economy using the mechanism of the eff (Extended Fund Facility – EFF) for a total volume of 17.5 billion dollars a period of 4 years.

The first tranche of $ 5 billion, Ukraine received 13 March 2015, the second at $ 1.7 billion – August 4, 2015. In September 2016, the IMF approved the granting Ukraine of the 3rd tranche for 1 billion dollars. More money from Fund of Ukraine has not yet received.