Initially IMF’s visit to Ukraine in September seemed to produce little results, but now an agreement between the Ukrainian goverment and the IMF has been reached. The main hurdle that was overcome was IMF’s requirement for a 50 % gas price hike for residential consumption, now a compromise was reached and the increase will be 23,5 %. Consequently, the IMF has now agreed to a 14-month stand-by loan agreement worth $3.9BN that will replace the existing IMF loan program which expires on March 2019.
This news reduces Ukraine’s risk of default in 2019 and helps stabilize the next year’s outlook for businesses. Budgeting should be a little simpler as fears of FX instability are reduced. Now it seems the main risks for businesses are political, as Ukraine prepares for presidential elections in March 2019.
