Ukraine Moves Closer to Resuming USD 5bn IMF Deal

July 19, 2021

Ukraine’s Parliament passed the key bill for judicial reform in the country last week. Two crucial pieces of legislation that received final approval on Jul 13 were related to a transparent re-establishment of the High Qualification Commission of Judges and an integrity assessment of the current and future members of the High Council of Justice - two key judicial governance bodies in Ukraine. International experts will have a temporary but decisive role in line with the recommendations of the Venice Commission.

The IMF welcomed the adopted legislation, pointing out that a role for international experts when selecting members of the High Council of Justice and the High Qualification Commission of Judges is a positive signal. Ukraine needs to resume the USD 5.0bn cooperation program with the IMF, which has been stalled for a year due to Kyiv’s failure to meet various reform commitments. Official IMF Spokesman Jerry Rice noted that the recent visit of a Ukrainian delegation led by Finance Minister Serhiy Marchenko to Washington was very constructive. We now believe that Kyiv will be able to unlock a new loan tranche from the IMF by the year-end, securing the hard currency inflow to cover the expected current account deficit, which we estimate at 2.3% of GDP for this year. Ukraine’s overall balance of payment deficit was at USD 446mn in Jan-May, according to the latest data from the National Bank. Other issues that the IMF considers as preconditions for the loan are the effectiveness of banking system supervision and the strength of anti-corruption bodies. Ukraine is also in position to receive macro-financial assistance from the EU in the amount of EUR 600mn and a loan from the World Bank for USD 350mn after the IMF program gets back on track. The government has to repay USD 3.9bn of foreign debt in the August-December period, the lion’s share of which is due in September when USD 3.0bn has to be sent to creditors amid the semi-annual block coupon payment to sovereign Eurobond holders. The National Bank had USD 28.4bn in foreign currency reserves as of the start of July, meaning the country is safe in terms of solvency. Ukraine’s total state and guaranteed debt amounted an equivalent of USD 91.5bn, which corresponds to the debt-to-GDP ratio of roughly 60%. The country’s total debt payments for 2022 - including both domestic and external - are estimated at near USD 15bn, underlining the need to find refinancing sources.
Meanwhile, the IMF’s decision to perform a new general SDR allocation equivalent to USD 650bn to all member countries, will eventually lead to a USD 2.7bn unconditional payment to Ukraine.


Eavex Capital welcomes any questions or comments you may have regarding our research products.
Please contact us by email:

Dmitry Churin, Head of Research,