KIEV (Reuters) – Ukraine’s central bank said on Monday a failure to cooperate with the International Monetary Fund and the inefficiency of state lenders were among the biggest risks to the country’s financial stability next year.
Backtracking by the government on commitments under a $17.5 billion IMF program has delayed the disbursement of funding and raised concerns that a drive to modernize the economy and eliminate corruption has stalled.
“The key risks to financial stability include the suspension of cooperation with the IMF, the slow pace of structural economic reforms, the low efficiency of state-owned banks, and the weak legal system,” the central bank said in a statement.
It said it would be hard for Ukraine to refinance its sovereign and sovereign-guaranteed debt in 2018-2020 without support from the Fund.
“Ukraine should start talks on the launch of a new program of cooperation with the IMF before the end of the current one in early 2019,” it said.
Overall, the bank said the risks facing the banking system and the economy were moderate, but could rise in 2018.
“We do not expect any serious stresses or shocks to the banking system,” Deputy Governor Kateryna Rozhkova said in a briefing.
Bad loans make up 56 percent of debt to Ukraine banks: central bank
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