The International Monetary Fund (IMF) has completed the first review of the Stand by (SBA) program and decided to allocate a second tranche of USD 699 million to Ukraine, and extend the program until June 2022 year.
The decision was made by the fund’s board of directors at a meeting in Washington on the night of November 23.
According to the decision, the Ukrainian government undertakes to return fiscal policy to a regime consistent with the medium-term debt sustainability, while protecting the socially vulnerable, strengthening income management and reducing fiscal risks from quasi-fiscal operations (operations that are not reflected in the indicators budget, but may lead to a decrease in budget revenues – ed.), in particular.
Among other obligations of Ukraine:
- ensuring the independence of the central bank and focusing monetary policy on returning inflation to the target level;
- ensuring the financial health of banks, in particular through good governance in order to restore sound bank lending in the private sector;
- fighting corruption and promoting judicial reform;
- reducing the role of the state and corporate interests in the economy in order to improve the business environment, attract investment and increase the potential of the economy.
Taking into account the first tranche, the total payout under Stand by will be approximately USD 2.8 billion for the total SDR program of USD 2 billion.
Ukraine’s IMF-supported economic program aims to help the government cope with the effects of the COVID-19 shock, support economic recovery, and move forward with important structural reforms to reduce key vulnerabilities.
According to the website of the Ministry of Finance, the Minister of Finance of Ukraine Serhiy Marchenko welcomed the decision of the IMF Board.
“I thank the IMF representatives, who have been our reliable partners for a long time. The decision to allocate the tranche is the result of our structural reforms and evidence that our country is moving in the right direction. We have made significant efforts to achieve this result. The presence of the IMF program has a positive effect on the international image of our country, as well as opens opportunities for financial support from a number of international partners” – said Serhiy Marchenko.
To remind, on November 22, the Minister of Finance of Ukraine Serhiy Marchenko met with the newly appointed Vice President of the European Bank for Development and Reconstruction for Policy and Partnership Mark Bowman.