“Figures released this month showed that Ukraine’s central bank reserves, which have been declining for the past two years, shrank 7.4% in the past year, to $22.7bn, the lowest level since 2006,” the publication reports.
The slump in Ukrainian FX reserves serves as a reminder that Ukraine’s fragile external position continues to keep it one step away from a full-blown balance of payments crisis, FT quotes a July note of the London-based Capital Economics.
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“Creditors, including the IMF, are increasingly alarmed amid concerns over whether Ukraine will be able to service its debt obligations. When emerging markets were flush with western central bank easy money-driven liquidity, Kyiv managed to patch up state finances through domestic bond and eurobond issues. But with expectations building of US Federal Reserve tapering, the eurobond resource is becoming more expensive,” FT notes.
According to analysts surveyed by FT, the advent of the taper will reduce Kyiv’s ability to roll over debts through fresh eurobond issues, increasingly tilting the country towards a fresh IMF loan.
Meanwhile, the IMF spokesperson said in comments for FT that “There have been no in-depth discussions of such a comprehensive programme at the policy level since . . . April. We understand that the authorities are in the process of elaborating such a comprehensive programme and that they plan to present it soon.”
