IMF merges next two tranches to agree USD 1.

4 bln for Ukraine

Its economic policies have been generally implemented as agreed upon with
Ukrainian authorities persisting in taking difficult economic measures despite
the volatile political situation, the IMF reported, also recognizing that the
armed conflict in the east is taking its toll on the economy and society.

KYIV, Sep 2, 2014 (UBO) Concorde Capital told clients yesterday in an online advisory
that the executive board of the International Monetary Fund (IMF) completed on Aug. 29
its first review of Ukraines performance under an economic program supported by its
stand-by arrangement (SBA) and enabled the disbursement of USD 1.39 bln, the programs
second tranche. Its economic policies have been generally implemented as agreed upon
with Ukrainian authorities persisting in taking difficult economic measures despite the
volatile political situation, the IMF reported, also recognizing that the armed conflict in the
east is taking its toll on the economy and society.

Nevertheless, the IMF reported it is building its plans on the assumption that the conflict
will subside in the coming months. In completing its review, the executive board approved
waivers of nonobservance of performance criteria related to international reserves
accumulation, publicly guaranteed debt and the governments cash deficit on the basis of
corrective actions taken. In addition, in light of the slight delay in completing
the programsfirst review, the board approved the Ukrainian authorities request for
merging the remaining two reviews scheduled for 2014, while keeping the total financing
under the arrangement unchanged.

Concorde analyst Alexander Paraschiy added: The announcement is long-awaited news
that should improve confidence in Ukraines solvency for the next few months. At least the
redemption of USD 1.6 bln in Naftogaz Eurobonds in September looks much less risky now.
Nevertheless, the Funds positive review, and its readiness to merge the third and fourth
tranches (worth USD 2.8 bln combined) to provide the opportunity that all funds
committed for 2014 are delivered by the year end, are very helpful in terms of stabilizing
Ukraines ForEx market and strengthening the budgets solvency.

In light of the recent Russian army offensive though, the IMF assumption that the armed
conflict in the east will subside in the coming months looks like a wishful thinking.
Therefore, there could be more changes in the program over the upcoming months. The
Fund said it has mitigated requirements on program benchmarks, providing no details.
Indeed, we anticipate widened financial support from the Fund if Ukraines geopolitical
situation worsens.

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