IMF expects Ukraine to conclude debt operation by July 31

Макроэкономика 24.07.2015 The IMF expects the Ukrainian government will reach progress with its private creditors on restructuring its external debt by July 31, Gerry Rice, the director of the Fund’s communications department, told a July 23 press briefing. The IMF tentatively scheduled a board meeting for July 31 to consider providing the second loan tranche under Extended Fund Facility program with Ukraine worth USD 1.7 bln. “It’s vital that Ukraine and its creditors would make significant progress toward an agreement … and to do so before our review. We want and expect that outcome”, Rice said. The Ukrainian Finance Ministry’s talks with the ad hoc creditors committee on debt restructuring, preannounced in their July 15 joint statement, won’t happen this week, Bloomberg reported on July 23, citing anonymous sources. The talks between the two sides are still being conducted at the level of their advisers, according to the source. Alexander Paraschiy: The failed meeting this week suggests the advisers haven’t made progress in narrowing the gap between the positions of the parties. Combined with the message from the IMF spokesman, this development significantly increases the likelihood that Ukraine will introduce a moratorium on its external debt servicing soon, we believe. Mr. Rice’s statement looks like a direct instruction for the Ukrainian government to complete restructuring talks by the end of the next week. In such a zeitnot, the Ukrainian government is inclined to use its strongest argument to persuade the debt holders to quell their appetites, which is a moratorium. For that reason, the probability that the Finance Ministry will introduce a debt moratorium by end-July looks very high. This turn of events leads us to reconsider our conclusion reached yesterday, which we made after a MinFin press statement, on a high likelihood tha