KIEV (Reuters) - Loans from the International Monetary Fund will help Ukraine maintain growth and price stability although overall economic performance will weaken due to expected political upheaval in this year’s elections, a Reuters monthly poll showed on Tuesday.
Ukrainians will vote in presidential elections in March and parliamentary elections in October.
Incumbent President Petro Poroshenko faces a tough re-election battle and has consistently trailed in the polls. Former Prime Minister Yulia Tymoshenko has been the early frontrunner and is an outspoken critic of Ukraine’s IMF programme.
According to the median forecast of analysts polled by Reuters, Ukraine’s gross domestic product will grow 2.9 percent this year compared with 3.2 percent expected for 2018 and 2.5 percent in 2017.
They see inflation slowing to 8.5 percent in 2019 from 10.2 percent expected at the end of 2018 and 13.7 percent in 2017.
Last month Ukraine secured a new $3.9 billion stand-by agreement with the IMF that also unlocked loans from other international lenders and helped the country build up a foreign currency cushion needed to service foreign debts this year.
In late December Kiev received the first tranche of the IMF aid worth of $1.4 billion and 500 million euros of European Union assistance. With the World Bank’s guarantees, the government also borrowed 349 million euros from Deutsche Bank.
If the IMF programme stays on track, Ukraine will get a further $2.5 billion from the Fund and more assistance from the EU and the World Bank this year.
The central bank’s foreign currency reserves are at a four-year high of $20.7 billion, strengthening expectations that the Ukrainian hryvnia would not weaken against the dollar by more than five percent by 2019-end.
Political and economic turmoil in 2014/2015 pulled the hryvnia to 24 per $1 from 8. Since then it has weakened further and was close to 28/$1 last year.
Editing by Matthias Williams and Alison Williams