“Ukraine will press for a third international bailout in four years this week as the former Soviet republic gears up for $10 billion of debt payments and foreign reserves languish near a two-year low.
Under pressure from a shrinking economy and an energy dispute with Russia’s OAO Gazprom (GAZP), the government will seek a $15.4 billion loan when an International Monetary Fund mission arrives today in the capital, Kiev. Its last aid package, which ended Dec. 27, was halted for failure to meet the fund’s terms.
Ukraine is grappling with falling output of steel, its top export earner, a widening current-account gap and reserves that have fallen below three months of imports. While the government can finance itself in global debt markets at present, an IMF accord is required to put the country on a “sustainable path,” according Viktor Szabo, who helps manage $10 billion at Aberdeen Asset Management (ADN) in London.
“They need a deal,” said Szabo, whose fund exited Ukrainian state and corporate debt in November because of the absence of an IMF agreement. “The current-account deficit isn’t sustainable as seen from the pressure on the currency and reserves.”
The hryvnia has fallen 1.7 percent during the last year to to 8.1435 per dollar, prompting the central bank to sell foreign currency. Reserves dropped to $24.5 billion in December from $38.2 billion in August 2011 as the current-account gap widened to a record $14.4 billion in all of 2012, when imports averaged $8.6 billion a month, according to the central bank data.
