What will Ukraine pay for the IMF loans with?

The IMF approved a new two-year «stand-by» program for Ukraine in the amount of $ 17 billion. The first $ 3 billion will be tranferred immediately.
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During the many years of cooperation Kiev had not implemented the recommendations of the Fund in full. Experts warn that now it will be harder to do, as well as more critical in preventing the impending disaster.

The International Monetary Fund approved a two-year program «stand-by» for Ukraine volume of $ 17 billion. That is the maximum possible for 800% of the quota of the country. The first tranche of $ 3 billion. The fund of exception ready to provide immediately. In a statement, the IMF points out that the situation in the Ukrainian economy deplorable, but the government program supported by the Fund is aimed at restoring macroeconomic stability and the resumption of economic growth.

Domestic experts have interpreted the decision of the Fund more than positive. As the director of the analytical group Da Vinci AG Anatoly Baronin, in the present circumstances, when Europe can not afford to drastic action against Russia, its strategy will be to the financial support of Ukraine. "This fact, and the loyalty of the Ukrainian government gives a baseassume that aid will be provided to Kiev in a fairly short period of time "- said the expert, stressing that Ukraine has overcome the period of uncertainty in relations with the IMF, and both sides have moved from words to actions. So what can be considered the decision a welcome breakthrough in the relations between Ukraine and the IMF, which had been somewhat strained during operation of Yanukovych-Azarov government.

Skeptics wonder, why do we need a new debt bondage, burdened with quite complex and time-consuming conditions, if it is possible to intercept the money from Russia or just less than stealing from the treasury. "Today Ukraine faces actually have two choices: take the money and use them effectively, or do not take, and actually go to the default stage. This means that Ukraine will not be able to fulfill its obligations, not only to the creditors, but also to its citizens ", - said the head of the Institute for Economic Research and Policy Consulting Igor Burakovsky. He doubts that the declaration of default is an acceptable scenario in the current political environment.

thusth, the fateful decision was made, and the money is on the way, and the direction of their use is predetermined.

Where will the IMF loans

According to Finance Minister Alexander Shlapak, the first tranche from the IMF in the amount of $ 3 billion. Will come May 5-8, and all the necessary documents are ready. . About $ 1 billion will be directed to the National Bank, more than $ 2 billion -. To cover the budget deficit. That is actually part of the money will "will pass" and not fall into the real economy, in need of long-term resources. But experts point out that this does not apply to the IMF's objectives.

"The IMF's resources - support the macro-level, which is not intended for social benefits or subsidies to individual industries. A key trend - the saturation of international reserves, or in rare cases - to cover the budget deficit. At the present time, in our view, the priority for Ukraine is to fill the gold reserves to increase the stability of national currency and reduce risks in payments external debt ", - said Baronin. He predicts improvement in the districtnkah borrowing. "The cost of borrowing both at the state and corporate level will be greatly reduced. Sovereign ratings will be raised. This greatly ease the pressure on the economy of the country ", - said Baronin.

In addition to long-term bonuses, is expected to stabilize the exchange rate in the near future, subject to further displacement of currency speculators and administrative impact on the market. "In the case of allocation of credit tranche of the IMF and the stabilization of the situation in the south-east of the hryvnia exchange rate may strengthen to the level of 11 UAH / USD. for several months. Fluctuations in exchange rate will be less sweeping and more predictable than this will decrease the difference between the purchase price and sale of foreign currency in the cash and non-cash markets ", - commented the financial analyst of consulting company" Alpari "Alexander Mikhailenko. According to him, this will help to reduce foreign exchange risks in the business and stop the rapid impoverishment of the population as a result of the devaluation, because import prices stabilizedI.

IMF - a beacon for investors, and a new program will serve as a starting point for frozen loans and investments from numerous donors from the EU, USA, Japan and international organizations in the amount of about $ 17 billion "This is -. The money that we get together with the IMF money by US, Canada, the EU, the European investment Bank and the European Bank for reconstruction and development. If there are signs of macroeconomic stabilization in Ukraine, these structures are willing to invest long-term debt to finance long-term investment projects, "- said Burakovsky and stressed that these funds will be provided by the state is not, as the private sector and for specific investment projects.

But all this will happen, and Ukraine has not received the loan itself, but has already started to pay the bills.

day of reckoning

Inspired by the IMF promises of cooperation and statements about the visible progress in relations, the new government immediately after his appointment, embarked on the execution of the Fund's recommendations. The first disappointing results of their performance became obestsenivanie hryvnia more than 40% as a result of the transition to a flexible exchange rate policy, increased from May 1, gas tariffs for households and industry, as well as the reduction of public sector employees and the freezing of capital budget expenditures under sequestration by more than 20 billion USD. These victims will likely not be the last, but expert opinion on possible new IMF requirements divided.

"Ukraine has fulfilled only the first stage requirements, cutting the costs for 2014, raising tariffs and adopt a law on public procurement, which have to close the bulk of the schemes embezzlement of public funds", - said the head of analytical department of Concorde Capital Alexander steam, stressing that the need to maintain fiscal discipline all the time - until complete recovery of the economy.

Burakovsky believes that to date, the key requirements of the Fund are made in advance. "With regard to a flexible exchange rate, this requirement, we even exceeded, as well as requirements to increase utility tariffs and sequestration of the state budget", - he said. According to experts, in the future the Fund will analyzesamb the situation in the Ukrainian banking sector and prospects for economic development of Ukraine in view of the current political situation.

Baronin convinced that the IMF will not put new conditions, as full effect of their implementation will manifest at least a year.

At the same time, experts are unanimous in their opinion that the IMF loan funds themselves do not lead to the exit of Ukraine from the crisis. "We need fundamental reform, the elimination of separatism in the East, undermining the flow of investments, increasing the transparency of use of budget funds, the fight against corruption", - says Baronin.

Also, according to Burakovsky, in the process of implementing the agreement with the IMF, in addition to economic issues, will have to return to the issue of the reform of the power structures and social protection of the population. "The big question is how we will continue to work with Russia, it is - a significant market. Many questions about the problem regions, which we have today. There are many issues that need to be addressed immediately ", - he says.

And among these urgent questions - and bs difficult relations with the Russian Federation.

Parallel Russia

Three months ago, Russia has promised a 30% discount on natural gas and intended to provide the next tranche of the promised loan of $ 15 billion. But even then, in spite of the dire state of the Ukrainian economy, experts warned that the cost of such aid can be further immersion domestic economy into the abyss. Not pushing any special conditions on the rights of the creditor, Russia thus made it clear that it is more important to drive Ukraine into debt and not return their loans.

"Getting the IMF will worsen the already strained relations with Russia. In this case, we can expect further decline in turnover and the tightening of external pressure on the currency market of Ukraine ", - says Mikhailenko. As an example, the expert leading the hasty rejection of the appeal of the hryvnia in the annexed Crimea, initiated by the Russian authorities.

In addition to the financial sanctions and trade restrictions, Ukraine should be ready to strengthen the Kremlin's political pressure, until the threat voennoginvasion, as is constantly claimed by the government. But the IMF has repeatedly stressed its willingness to work with Ukraine, regardless of the political situation in the country, since the Foundation is defining the government's desire to implement the reform plan. "The IMF has experience of working with countries in a state of political uncertainty and economic consequences of the annexation of the Crimea has already taken into account in the program of the Fund", - said Mikhailenko.

Meanwhile, experts stress that the Kremlin's reaction to the resumption of cooperation with the IMF should not be decisive for Ukraine, because it is obvious that the former policy of the parallel of building relations with the West and with Russia is impossible, primarily because of the failure of its Kremlin. "Moscow has set its sights on the destruction of Ukraine as an integral state, so I do not see any point in trying to sit on two chairs, including focusing on its credit resources", - said Baronin. The expert did not rule out that the receipt of the IMF loan funds will be accompanied by increased pressure from Moscow to the requirements of the paymentIncluding penalties for gas contracts, which need to be prepared.

There is a more optimistic point of view. "The current crisis is local, and therefore the devaluation of the hryvnia will give us the opportunity to increase exports quickly enough even in the loss of the Russian market - a couple said. - In addition to the foreign exchange market stabilization and the strengthening of the hryvnia, the agreement with the IMF will be a strong signal in the context of the confrontation with Russia. Providing billions of dollars in funds Ukraine, in terms of external aggression, the West itself will give a clear signal that he believes in the future of a sovereign country, and will protect your investment. "

last try

So far, none of the Ukrainian government not fully complied with the requirements of the IMF. For example, the previous program with the Fund did not succeed. In 2010, the IMF after lengthy negotiations, adopted a program in which Ukraine under the conditions could expect to receive for $ 1.5 bln. Each quarter. But since before the promised reforms never came, the program was limited to two tranches of 3.4USD JPL.

"The irresponsible policy popolzovavshis just money, but the reforms have not been implemented, all remained in a frozen state," - said the head of analytical department of the "Investment Capital Ukraine» (ICU) Alexander Valchyshen in an interview with UNIAN. In the expert's opinion, Ukraine should use this opportunity, because the implementation of the recommendations of the Fund's useful primarily for our country. "It is desirable to implement the reform in the first year and second year - just to maintain. It can be seen from the example of other countries where the IMF program, that in 1.5-2 years their economies returned to "shape" the more creditworthy ", - he said.

To avoid a repeat scenario Burakovsky advises the government to develop a clear borrowings management mechanism in order to use them to their destination and get a result. "We need clear principles of state aid, including state guarantees. For the mutual responsibility of the parties: both the state and the enterprises or industries - flooraid recipients. And we need an understanding of projects for which the money available. For example, an increase in production or other purposes ", - says the expert. He stressed that the state itself does not do anything, but can provide certain conditions, and in the future will determine the business strategy.

It is worth noting that currently perform seemingly simple recommendations of the Fund is complicated by the volatile political situation in the country. "In the near future the main issue - the election. After the elections - a new distribution of government portfolios and perhaps conduct of elections to the Verkhovna Rada. Again, it is not to reform. There is also an acute issue of possible military conflict with Russia, which could become an excuse for why we did not carry out reforms ", - said a senior analyst for the Economic Affairs of the International Centre for Policy Studies Vasily Povoroznik. According to him, expect serious reform is not necessary in the near future.

However, the current government has taken a number of commitments. Under the reform program, the IMF made public, it is - deficit reductionosbyudzheta to the level of 3% of GDP by 2016, while the settlement of "Naftogaz" deficit to zero by 2018. In addition, the government will ensure price stability while maintaining a flexible exchange rate regime, which the policy of inflation targeting will be introduced by mid-2015. A financial sector reforms include strengthening the supervision and conduct of stress tests of banks. Critical elements of the program, according to the Fund are changes in the field of public procurement, tax administration, anti-money laundering and corruption.

Keeping the Promise, the Fund estimates that will allow Ukraine to survive the expected economic decline by 5% in the current year with the acceleration of inflation to 16%. And in the next year to return to growth, getting to + 2% of GDP in 2015 and about 4% - in the coming years, with the moderation of inflation by the end of 2016 to 6%.

Results default to the IMF is easily predictable. The Fund warned that the first tranche of the subsequent payments will depend on the results of the monitoring on the performance criteria. And if the moneyand will again "will pass" tranches stop. Alternate aerodromes in aid of the Russian Federation is no more, because its price is not acceptable.