Ukraine central bank warns against losing international financial support

By bne IntelliNews November 24, 2016

The National Bank of Ukraine (NBU)'s governor Valeriya Gontareva believes that attempts to destabilise the political situation in the country have resulted in the slowing of structural reform and threaten the loss of support from international institutions, she said a meeting of the NBU Council in Kyiv on November 24.

"The risk is that the structural reforms to maintain stability of the economy are being conducted in the country more and more slowly," Interfax news agency quoted Gontareva as saying. "Ukraine is facing a threat of diminished support from international institutions."

Gontareva, who has been under attack for forcing the closure of scores of insolvent banks, has hit back by accusing Yulia Tymoshenko, leader of the opposition Batkivshchyna party, of trying to destabilise the country for her own political ends.

In September, the IMF approved a $1bn tranche from its credit programme agreed with Ukraine in 2015 after almost a year of delays in allocating funds. Earlier, officials in Kyiv said they expected a further $1.3bn tranche before the year's end.

However, the NBU sees risks that transfers of this fourth tranche might be postponed as some requirements of the IMF were not fulfilled.

Financial support to Ukraine from other donors, in particular the EU and US, depends on Kyiv's commitment to reforms agreed with the IMF. Ukraine also received the first €600mn tranche under the EU's €1.8bn support programme in July 2015. The EU will provide a new €600mn tranche of macro-financial assistance once Kyiv lifts its ban on export of timber and makes all necessary social payments to internally displaced persons.

According to Gontareva, the risks that Ukraine would not receive the fourth tranche from the IMF and the second tranche of €600mn of macro-financial assistance from the EU this year are high.

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