Ukraine to receive US$890 million from IMF: Fund completes first review of programme
The Executive Board of the International Monetary Fund (IMF) has completed the first review of the extended financing programme within the Extended Fund Facility (EFF) programme for Ukraine, and Ukraine will receive about US$890 million, which will be allocated for budget support.
Source: IMF
Details: The mechanism of extended financing was approved by the IMF Board of Directors in March 2023 and is part of a general package of support for Ukraine that equals US$115 billion.
Quote: "The authorities have made strong progress toward their commitments under the EFF under challenging conditions, meeting all applicable quantitative performance criteria through end-April and structural benchmarks through end-June, and remain highly committed to the program.
Continued strong ownership and reform momentum are necessary to safeguard macroeconomic stability, enhance institutional reforms, and support reconstruction efforts, while facilitating Ukraine’s path to EU accession," the statement reads.
Details: The IMF stressed that this includes:
- preserving a strong tax revenue base (including by avoiding measures that could weaken the tax base),
- support of stable disinflation and a stable exchange rate; support of the health of the banking sector,
- promoting important reforms in the sectors of management and fighting against corruption, mainly when it comes to the declaration of assets, counteracting money laundering and financial terrorism.
Quote: "It is also vital that external financing for budget support continues on appropriately concessional terms to safeguard macroeconomic stability and ensure that the financing of reconstruction projects is on terms consistent with fiscal and debt sustainability," the statement reads.
Details: The fund stressed that despite the war, the economy of Ukraine demonstrates more stability than expected after its abrupt fall in 2022.
Quote: "GDP growth has been upgraded to 1–3 percent in 2023 as domestic demand recovers, inflation is decelerating, and FX reserves are strong amid a stable FX market. Overall, macroeconomic and financial stability have been maintained, thanks to prudent policymaking as well as continuous and timely external support," the fund added.
Background:
- The Executive Board of the IMF approved a four-year financing package in the sum of US$15.6 billion in order to help the country cover its basic financial needs against the backdrop of the ongoing war. In total, Ukraine may receive three tranches of the total sum of 3.3 billion SDR (US$4.5 billion) from the IMF this year.
- Later, the IMF published 19 structural requirements, which Ukraine promised to fulfil within the framework of the US$15.6 billion cooperation programme.
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