S&P forecasts hryvnya devaluation down to 30.3 UAH/USD in 2019

Standard&Poor's, international rating agency, forecasts Ukraine to receive USD 3 billion from the International Monetary Fund within the new cooperation program and hryvnya to devaluate down to 30.3 UAH/USD in 2019. 

It was reported by the agency. 

It's noted that predicts that the international reserves of Ukraine at the end of 2018 will amount to USD 18.432 billion, hryvnya exchange rate - 29.5 UAH/USD, in 2019 - international reserves will be USD 19.442 million, exchange rate at 30.3 UAH/USD, in 2020 -  international reserves will be USD 20.048 billion, hryvnya exchange rate - 32.1 UAH/USD, and in 2021 - international reserves will be USD 19.559 billion, hryvnya exchange rate 32.1 UAH/USD.

"The government of Ukraine will have to pay close to USD 5.5 billion in 2019 and 2020 (approximately 4.5% of GDP) on its foreign liabilities including interests. In addition, repayments toward government foreign currency debt in the domestic market total about $3 billion (2.3% of GDP) in 2019. Ukrainian banks as the main participants of domestic debt market have their own foreign currency liabilities to pay in 2019. Thus, refinancing index for the government's foreign currency debt in the domestic market could reach 100%," teh statement reads. 

According to the agency, the funds received from the International Monetary Fund will be channeled to the international reserves and won't be used for payments on sovereign debts.

"We assume that Ukraine will draw about $3 billion in 2019 from the new IMF program. These inflows would go directly to boosting the foreign currency reserves at the central bank and would not be available for sovereign foreign currency debt repayments. At the same time we consider the new arrangement would also unlock additional donor financing of about EUR 1 billion from EU macrofinancial assistance and $800 million in World Bank guarantees. We also assume proceeds from fresh sovereign eurobond issuance will cover external financing needs, as will some proceeds from hryvnia-denominated bond issuance in the domestic bond market. Together, these funds should help Ukraine meet its external foreign currency debt repayment needs in 2019," S&P states. 

Absent the IMF funding and additional donor funds tied to the IMF program, S&P experts continue to see a risk of marked deterioration in Ukraine's external financing, given its large refinancing needs.