International Monetary Fund staff and Ukrainian authorities have reached a staff-level agreement on the third revision of the Extended Financing Fund (EFF). The NBU said that Ukraine promised the IMF.
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< p>Ukraine has fulfilled all structural beacons and all but one of the quantitative performance criteria (we are talking about a slight non-compliance with the lower limit of tax revenues, which is associated with blocking the borders).
Taking this into account, the IMF Board of Executive Directors will consider providing Ukraine with a tranche in the amount of 663.9 million special drawing rights (about $880 million in equivalent).
During the mission, IMF specialists were convinced that the Ukrainian authorities remain committed to the course of structural reforms aimed at maintaining macroeconomic stability, supporting development goals and advancing accession to the EU.
Maintaining macroeconomic and financial stability, together with significant external financing, ensured a stronger-than-expected economic recovery last year.
The Fund raised its estimate of GDP growth for 2023 from 4.5% to 5%. At the same time, given that the war continues, as well as the delay in the receipt of external financing, IMF specialists expect that the growth of the Ukrainian economy in 2024 will slow down to 3-4%.
Ukraine's financial system remains stable and liquid, although given the uncertainty associated with the war, it is necessary to continue to remain vigilant.
“The Fund noted that the National Bank’s recent assessment of the stability of banks and prompt actions to carry out additional capitalization were positive steps to maintain stability.
Future priorities include strengthening supervision and the financial safety net, deepening financial market infrastructure, including the payment system, as well as restoring regular sustainability assessments and, when conditions permit, completing an independent assessment of asset quality,” the NBU said in a statement.
Foreign exchange market
IMF experts also noted that the foreign exchange market of Ukraine remains stable after the transition to a managed exchange rate flexibility regime in October 2023.
“An important task in the direction of exchange rate policy will remain the easing of foreign exchange restrictions. At the same time, each step in this direction will be carried out carefully and gradually, in accordance with the Strategy for easing foreign exchange restrictions, transitioning to greater exchange rate flexibility and returning to inflation targeting,” the regulator said.
Still in In the direction of fiscal policy, the Ukrainian authorities should focus efforts on ensuring budget revenues and mobilizing financing in the domestic debt market.
The NBU noted that prioritizing government spending and avoiding measures that negatively affect the budget revenue base are also important.< /p>
In the future, work will be carried out to restore the sustainability of public debt, fiscal risks will be carefully monitored, as well as the planned increase in the target orientation of the state program of affordable lending “5-7-9%” and the proper implementation of the recently adopted law on corporate governance.
“Another successful agreement at the personnel level indicates the constant vector of our policy. We will continue to fulfill our commitments to strengthen Ukraine's macro-financial stability, obtain the necessary financing from international partners and bring closer accession to the EU.
The ongoing full-scale war remains a key risk for the Ukrainian economy and financial system. At the same time, we have already managed to demonstrate our ability to act decisively and proactively in order to achieve our goals,” said the head of the NBU Andrey Pyshny.
Remember
March 31, 2023 Executive Board The IMF has approved a new four-year program under the Extended Fund Facility (EFF) for Ukraine with financing of approximately $15.6 billion (11.6 billion special drawing rights).
The program is part of a package of international support for Ukraine amounting to , which is about $122 billion for 2023-2027.
The state budget of Ukraine has already received three tranches under the IMF EFF program with a total volume of about $4.5 billion. In 2024, the EFF program provides for $5.4 billion budget assistance to Ukraine.