Ukraine may agree on an International Monetary Fund loan by September because of a wide current-account gap and limited access to global financial markets, according to Goldman Sachs Group Inc.
“The current-account deficit is likely to come in at around 8 percent of gross domestic product, or $12 billion to $14 billion,” Andrew Matheny, a Moscow-based analyst at Goldman, said today in an e-mailed note. “This would bring reserves from the current $25 billion down to $13 billion to $15 billion, in our view an unsustainably-low level.”
Ukraine will probably sign its delayed Association Agreement with the European Union this year and may succeed in renegotiating a natural gas supply pact with Russia, which could save the government about $2 billion a year, Goldman said.
Ukraine is seeking IMF aid after plunging global prices for exports such as steel pushed its economy into recession. While the Washington-based lender has visited the former Soviet republic twice this year, it hasn’t agreed on a new loan because its demands to reduce heating subsidies, make the exchange rate more flexible and tighten fiscal policy haven’t been met.
GDP contracted 1.3 percent from a year earlier in the first quarter, state statistics data show. Growth may rebound in 2014 should the country get IMF aid this summer, according to Matheny.