The Ukrainian Finance Ministry Serhiy Marchenko said Ukraine’s $5bn stand-by agreement (SBA) with the International Monetary Fund (IMF) may be extended by six months on August 25.
"It is being discussed, but there is no final decision yet. That is, the stand-by programme could be extended for six months. But it is too early to talk about such an extension," Marchenko said in an interview with Interfax-Ukraine. He added that the decision must be agreed upon with partners.
The current 18-month deal with the IMF is due to expire in the coming months after only a tranche of $2.1bn has been paid out. The programme was effectively suspended due to backtracking on reform. Kyiv has been negotiating with the IMF all year to restart the SBA and release the next tranche of $700mn.
According to recent reports the talks have been going well, but even if the $700mn is released soon there is not enough time left before the agreement expires in December for Kyiv to get the final $2.2bn tranche. An extension of six months would make this possible.
The minister’s announcement follows an inconclusive review of Ukraine’s previous SBA with the IMF in February of this year, where the IMF decided that Ukraine was not doing enough to implement necessary reforms that had been agreed on.
Marchenko also recalled that Ukraine is waiting for an IMF mission to come to Ukraine in September.
"The Ukrainian president had a conversation with IMF chief Kristalina Georgieva. It was an initiative of the managing director on this mission's visit. We expect the mission [to visit Ukraine] in September, as it was said," he said.
The IMF on June 9, 2020 approved a new 18-month SBA for Ukraine worth about $5bn with the immediate disbursement of $2.1bn as the first tranche.
Once the current SBA expires Ukraine, as well as Armenia and Georgia, which will also see their IMF programmes end, will have to start negotiating a new programme in 2022.
Previously Ukraine had a longer, more comprehensive extended fund facility (EFF) that runs over three years, but due to the reluctance of the government to implement many of the reform called for by the IMF the country was downgraded to the simpler and harsher SBA regime during the previous Poroshenko administration.