Ukrainian Central Banker Says IMF Needed to Avoid Rate Increases
By Daryna Krasnolutska and Volodymyr Verbyany (Bloomberg) -- Ukraine’s central bank may refrain from raising borrowing costs further if the eastern European nation resumes its $17.5 billion international bailout, which has been frozen for almost 10 months as reforms lag behind schedule. “First of all, it’s about the program from the International Monetary Fund,” Deputy Governor Dmytro Sologub said Friday in an interview in his office in Kiev, the capital. Cooperation with the fund means Ukraine will proceed with a revamp of its economy and be able to tap international debt markets, he said.
With inflation accelerating well above target, the National Bank of Ukraine unexpectedly boosted interest rates costs in October for the first time since 2015. It raised its benchmark again in December, ignoring calls from government officials who say cheaper credit is needed to help buoy fading economic growth.
Ukraine’s IMF loan has suffered repeated holdups as the government fails to tackle corruption and meet other conditions set by the Washington-based lender. Steps required for approval of the next aid tranche include increasing household natural gas prices, creating an anti-graft court and speeding up state-asset sales. The hryvnia has suffered amid the delays, losing 1.2 percent this year against the dollar, the most in eastern Europe.
Having said previously that the next IMF disbursement would come in the first quarter of 2018, the central bank now sees it happening later than that, according to Sologub, who declined to be more specific.