Ukraine’s Faster GDP Growth May Help Avoid IMF Loan, RenCap Says

An acceleration in Ukraine’s economic growth may help the government avoid a third International Monetary Fund bailout, Renaissance Capital said.

Gross domestic product may expand 3 percent this year, compared with an estimated 1 percent in 2012, Ivan Tchakarov, chief economist for Russia and the Commonwealth of Independent States at Renaissance Capital in Moscow, said today in an e- mailed note.

“A better global backdrop in 2013 may blunt government incentives to re-engage the IMF,” Tchakarov said. “The ruling Party of Regions has all the incentives to drag its feet and not enforce electorate confidence-busting measures until the all- important 2015 presidential elections.”

The IMF will send a mission to Ukraine this month to discuss a new loan as ebbing export demand weighs on GDP growth and central bank reserves stand at an almost three-year low. The government received $3.45 billion of a $15.4 billion stand-by loan signed in 2010 before the facility was frozen because officials refused to raise household utility tariffs.

“Rising external pressures may still likely bring Ukraine back to IMF’s embrace, but this may happen well after the winter season is over,” Tchakarov said.

To contact the reporter on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net;

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