OREANDA-NEWS. On 13 February 2009 was announced, that the IMF mission postponed the provision of the second tranche (USD 1.9bn) of its stand-by loan to Ukraine.  The postponement is related to high Budget Deficit 2009 of UAH 31.1bn (2.96% of the GDP), which was approved on 26 December 2008. Moreover, the IMF is also concerned in the borrowing plans of around USD 21bn announced by the government, which may reduce the amount of the stand-by loan. The term of the second tranche provision is now uncertain.

Millennium Capital considers the news to be NEGATIVE, since according to the current actions of the government, the Budget Deficit is not to be revised, which automatically means the break in the IMF financing. In particular, the CabMin is currently running the negotiations with Russia on receiving the loan of USD 5bn, though the conditions are not transparent enough. At the same time, the additional support is expected from the USA, Japan, China and other countries. In our view, the IMF loan is the most transparent and realistic one, while a lot of economic changes was made to guarantee its provision. Millennium Capital also considers that the Budget Deficit must be cut. Otherwise, the country risks suffering high inflation and further hryvnia devaluation.

Millennium Capital is an integrated financial services provider. Established in 2000 by a group of professionals with solid background in securities and corporate finance, Millennium Capital is now one of the major investment banking institutions.