IMF’s $1 bln tranche to Kiev will replenish international reserves — central bank

Ukraine will use the funds of the third tranche provided by the International Monetary Fund (IMF) to replenish the country’s international reserves, the National Bank of Ukraine (NBU) reported Thursday.

“The third tranche of financing amounts to 716.11 Special Drawing Rights (SDRs) and the equivalent of around $1 bln. Ukraine will receive its major part in SDRs and the remaining part in international currencies. The tranche will be used to boost the international reserves of the National Bank,” the regulator said.

According to NBU’s Deputy Governor Oleg Churiy, Ukraine usually receives tranches within several days from the moment when the IMF board of directors take a respective decision. “Should the funds be received, and another, fourth IMF tranche worth $1.3 bln is raised, the NBU expects its international reserves to increase from $14.1 bln to $17.2 bln by the end of this year,” a representative of the regulator’s press service said. Churiy said that the third tranche “is a signal for local and international investors that the country is taking the right track to recovery for sustainable economic growth.”

On Wednesday, September 14, the IMF board resumed its loan program for Ukraine after a yearlong pause, and decided to extend the third tranche worth $1 bln to Kiev. Ukrainian President Pyotr Poroshenko said the funds would allow the country “to maintain a sound hryvnia, strengthen the macroeconomic stabilization that has been achieved and support the first sprouts of economic growth.”

According to a source in the international organization familiar with the matter, the board meeting also focused on future plans. In case Ukraine meets the program’s criteria, the country may receive next tranche worth around $1.3 bln in November and another one worth around $2 bln in February 2017, the sources said.

In March 2015, the IMF adopted a four-year loan program for Ukraine worth $17.5 billion. It replaced the previous program of 2014, which was not implemented. In the framework of the new program, Kiev already received two tranches worth $5 billion and $1.7 billion.