By Anna Yukhananov
WASHINGTON, July 29 The International Monetary
Fund said on Monday that Ukraine must participate in
post-program monitoring because of its relatively large debt to
the Washington-based lender, subjecting its economic policies to
The IMF said the enhanced monitoring was triggered by its
rules, but it could also be a sign that the Fund is worried
about Ukraine's ability to pay back the $8 billion it owed the
IMF at the end of June.
The IMF froze a $15 billion standby credit program with
Ukraine in 2011 after Kiev reneged on commitments to raise
domestic gas prices. The program officially expired last
Ukraine received only two disbursements before the program
went off track, totaling about $3.4 billion.
The IMF's board decided Ukraine must still participate in
the monitoring given the size of its debts to the IMF in
relation to the size of the European nation's economy, the Fund
said on Monday.
The IMF usually reviews the economies of each of its 188
members once a year. But countries that received aid packages
may have more frequent discussions with the Fund to ensure they
can still repay their debts. The IMF may choose to step in with
advice if it is worried about a country's debt or policies.
The IMF said its extended monitoring of Ukraine's economy
will take place at the same time as Kiev's regular economic
health check in the fall, and the IMF's board plans to discuss
the findings in December.
A Reuters poll earlier this month showed Ukraine's economy
will not grow significantly in 2013, despite optimistic
government forecasts, as long as steel production continues to
Ukraine is also one of several emerging market economies at
risk of a balance of payments crisis due to severely depleted
central bank reserves, according to data from Bank of America
According to the data, Ukraine only has enough reserves to
cover three months of imports, putting it at risk should foreign
financing suddenly dry up. The reserves are also insufficient to
cover debt maturing before mid-2014.
Analysts and other donors have called on Ukraine to resume
cooperation with the IMF and improve its business climate in
order to attract more foreign investment.
Ukraine and the IMF launched talks early this year to nail
down a new aid package, but the Kiev government has found
alternative lending sources on external markets and has
indicated it does not require fresh IMF funds yet.
The IMF last week said it has not discussed details of a new
program for Ukraine since April.