National Bank of Ukraine denies threat of default

The Deputy Head of the National Bank of Ukraine (NBU), Dmytro Sologub, has denied that the country is in threat of default in the event of termination of cooperation with the IMF, RBC-Ukraine reports.

According to Sologub, the country's reserves are enough to pay off debt obligations, and rumors of default and restructuring of the national debt are no more than speculation.

"If you look at the reserves of the National Bank and compare them with the forthcoming payments, purely mathematically they are sufficient. Talk about default and restructuring is more speculation than a realistic scenario," Sologub said.

He once again made assurances that Ukraine has every opportunity to get through this external payment cycle painlessly, even without the Fund’s programme; however, if that were to be the case, the risks to the country's economy would increase.

"We are considering alternative scenarios, [and] they are diverse. If the IMF program does not resume until July, it does not mean that everything would turn bad the next day. We see that the economy has an underlying strength, [and] we see improvement in the terms of foreign trade. Rather, we are talking about the deterioration of medium-term prospects and an increase in the economy’s sensitivity to sudden shocks, not imminent problems expected tomorrow," the official explained.

In response to a question asking if he is aware of instances during which the country would restructure its debt to the IMF, Sologub responded that there are a number of countries that have not paid at all, or simply broke off relations with the IMF. He cited Zimbabwe as an example, as well as Argentina in 2001. But in Ukraine, assured Sologub, the question is not worth mentioning at the moment.

The media earlier reported that the IMF allegedly warned Ukrainian authorities about a possible disruption of the upcoming tranche. It was alleged that the Fund was dissatisfied with the decisions of the Ukrainian government regarding the powers of the Ministry of Finance.

Ukraine stands to pay $7.4 billion on foreign currency debts in 2018. At the same time, the NBU does not expect a reduction in international reserves.

  NBU, Economy of Ukraine, IMF