European Union and IMF: Support and Devaluation of Hryvnia
The European Union is trying to conclude a €140 billion credit agreement for Ukraine using frozen Russian assets. At the same time, the International Monetary Fund is considering a 'smooth' devaluation of the hryvnia as part of the new support program. These steps will be crucial for the country's currency market but will require careful examination.
Financial expert Oleksiy Kozyrev believes that providing credit from European funds, backed by frozen Russian assets, will contribute to the financial stability of Ukraine. It is expected that the loan amount will be €140 billion, but the agreement may only be realized in 2026.
€140 billion from the EU: Hope and Reality
'Ukraine will receive about 140 billion euros in the form of new loans from the frozen assets of the Russian Federation,' Kozyrev explained.
One of the conditions of the agreement is the repayment of the loan only if Russia pays reparations for military actions. Otherwise, the funds will become non-repayable aid. Preparation for the allocation of funds may take until mid-2026 due to EU bureaucratic procedures.
IMF Pressure and 'Smooth' Devaluation
'The IMF forecasts an average dollar exchange rate in 2026 at 45.4 hryvnias per dollar,' emphasized Kozyrev.
Another important aspect is the IMF's support regarding the gradual weakening of the hryvnia. This is necessary to stimulate exports and reduce the negative trade balance, which may reach $38-40 billion by the end of the year. The weakening of the hryvnia will also help replenish the budget through increased customs revenues and a positive revaluation of the NBU reserves.
Debts, Risks, and Balance of Interests
'If there is significant devaluation, this will lead to a substantial increase in our external debt in hryvnia equivalent,' the expert emphasized.
The government and the National Bank avoid sudden devaluation due to the structure of the state debt, which is denominated in foreign currency. A sharp drop in the hryvnia could cause panic among the population and increase inflation.
Exchange Rate Forecast for the End of 2026
'Devaluation of the hryvnia to the dollar will be around 45-46 hryvnias by the end of 2026... For the euro, I would currently expect a rate of about 50-51 hryvnias per euro by the end of 2026,' noted Kozyrev.
Oleksiy Kozyrev urges the country's leadership to find a compromise approach to devaluation to make it smooth and controllable. Despite this, risks from the continuation of the war and high military expenditures remain, which will require new financial solutions.
The message from the teachers of the European Union and the IMF regarding the provision of a loan for Ukraine and the possible devaluation of the hryvnia indicates attempts to improve the financial situation in the country through additional support and regulation of the currency market. However, it is necessary to avoid sudden changes in the exchange rate to prevent instability and social problems.