According to anonymous sources, Bloomberg reports, the International Monetary Fund is increasing pressure on the National Bank of Ukraine regarding the devaluation of the national currency.
Points of attention
- Ukraine, heavily reliant on international assistance, is in negotiations with the IMF for a new funding package amidst the ongoing discussions.
- IMF's Managing Director, Kristalina Georgieva, is expected to visit Ukraine to demonstrate support for the country's funding ambitions.
What the IMF proposes
According to insiders, the Fund regularly reminds the NBU about the benefits of controlled devaluation of the hryvnia.
According to foreign experts, this will provide an opportunity to strengthen the tense financial situation in Ukraine by increasing budget revenues denominated in the national currency.
However, the National Bank does not like this approach, because in this case it is about risks for inflation and public opinion.
Ukraine received most of the $15.6 billion under the IMF program agreed in 2023, and the parties are now negotiating a new package that could amount to $8 billion.
As the media has learned, IMF Managing Director Kristalina Georgieva intends to visit Ukraine soon.
Its main goal is to demonstrate support by reinforcing Ukraine's ambitions to obtain additional funding.
Devaluation could lead to an increase in nominal budget revenues, as export contracts are denominated in foreign currency. However, the projected benefits are limited, as Ukraine's budget is heavily dependent on direct international assistance.
