Ukraine may receive $1.4 billion tranche from IMF in 2021

Ukraine may receive a tranche of the International Monetary Fund (IMF) in the amount of about $1.4 billion in October-December, J.P. Morgan said in the October EMEA EM Emerging Markets research.

We believe that the IMF will pay a tranche of $1.4 billion in the fourth quarter of 2021, but is considering a possible range of this amount from $1 billion to $1.5 billion, J.P. Morgan said.

However, as noted, given the SDR allocation, the fund may pay a lower amount.

Analysts also believe that the National Bank will continue the trend to increase the refinancing rate and in January-March 2022 it will grow from the current 8.5% per annum to 9%, in the second quarter – up to 9.25%, in the fourth – up to 9.5%.

Regarding the forecast for the growth of the Ukrainian economy, J.P. Morgan did not change its April estimates and expects Ukraine’s real GDP to grow 4.5% in 2021 and 5% in 2022.

At the same time, J.P. Morgan raised its forecast for average annual inflation in Ukraine to 9.2% in 2021 compared to April expectations of 9%, and in 2022 – to 7.8% from 7.3%. The analysts believe inflation will be 9.5% at the end of this year and 8% at the end of 2022.

J.P. Morgan expects the hryvnia exchange rate will average Hr 27.4/$1 in 2021, and at the end of the year it will be at Hr 27.5/$1. At the same time, in 2022, they expect a devaluation to Hr 27.9/$1, at the end of next year – Hr 28.5/$1.

The deficit of the balance of payments in 2021 is expected at 1.6% of GDP, and in the next – 2.3% of GDP, the study says.

J.P. Morgan predicts deficit of the state budget of Ukraine at the end of 2021 at 3.9%, in 2022 – 3.2%.