IMF To Provide To Ukraine USD 500 Mln

(MENAFN- Kuwait News Agency (KUNA)) WASHINGTON, June 30 (KUNA) -- The Executive Board of the International Monetary Fund (IMF) completed the Eighth Review of the EFF, enabling the authorities in Ukraine to draw USD 0.5 billion (SDR 0.37 billion), which will be channeled for budget support.
A statement by the IMF on Monday said, this will bring the total disbursements under the IMF-supported program to USD 10.6 billion.
Ukraine's 48-month EFF, with access of SDR 11.6 billion (equivalent to about USD 15.5 billion, or 577 percent of quota), was approved on March 31, 2023, and forms part of an international support package totaling USD 152.9 billion in the program's baseline scenario.
Ukraine's IMF-supported program helps anchor policies that sustain fiscal, external, and macro-financial stability at a time of exceptionally high uncertainty.
The EFF aims to support Ukraine's economic recovery, enhance governance, and strengthen institutions with the aim of promoting long-term growth and investment.
For the Eighth Review, Ukraine met all end-March and continuous quantitative performance criteria as well as the prior action to submit to the Cabinet of Ministers of Ukraine a detailed reform plan for the State Customs Service (SCS).
Two structural benchmarks on tax reporting for digital platform operators and publication of the external audit of NABU were also completed.
Four new benchmarks were also established, including: measures to update the single project pipeline; preparation of a prioritized roadmap for financial market infrastructure; implementation of international valuation standards; and development of legislative proposals to align securitization and bonds with international standards.
The timelines of some other structural benchmarks, including the appointment of the head of the SCS, have been reset by the IMF Executive Board to allow the authorities more time to complete these important reforms.
The authorities also requested a rephrasing of access to IMF financing over the remainder of 2025 to have better align them with Ukraine's updated balance of payments needs, while the overall size of the program remains unchanged.
The 2025 growth forecast has been maintained at 2-3 percent as a smaller electricity deficit is offset by lower gas production and weaker agricultural exports.
Pressures from Russia's war will require a supplementary budget for 2025, and the medium-term fiscal path has been revised to better reflect the authorities' policy intentions on revenue mobilization and expenditure prioritization.
The National Bank of Ukraine (NBU) has maintained a tight monetary policy to respond to the still high inflation, while inflation expectations remain anchored.
FX reserves remain adequate, sustained by continued sizeable external support. Overall, the outlook remains subject to exceptionally high uncertainty.
Following the Executive Board discussion on Ukraine, Ms. Gita Gopinath, First Deputy Managing Director of the IMF, said in a separate statement "Russia's war continues to take a devastating social and economic toll on Ukraine.
Nevertheless, macroeconomic stability has been preserved through skillful policymaking as well as substantial external support," Gopinath said.
"The economy has remained resilient, but the war is weighing on the outlook, with growth tempered by labor market strains and damage to energy infrastructure.
Risks to the outlook remain exceptionally high and contingency planning is key to enable appropriate policy action should risks materialize" Gopinath added.
"The Fund-supported program remains fully financed, with a cumulative external financing envelope of USD 153 billion in the baseline scenario and USD 165 billion in the downside scenario, over the 4-year program period.
This includes the full utilization of the approximately USD 50 billion from the G7's Extraordinary Revenue Acceleration Loans for Ukraine (ERA) initiative," Gopinath said.
"Full, timely, and predictable disbursement of external support, on terms consistent with debt sustainability, remains essential to achieving program objectives," Gopinath added.
"The continuing war has necessitated a Supplementary Budget for 2025.
Restoring fiscal sustainability and meeting elevated priority expenditures over the medium term will require continued decisive efforts to implement the National Revenue Strategy.
This includes modernization of the tax and customs services (including the timely appointment of the customs head), reduction in tax evasion, and harmonization of legislation with EU standards.
These reforms, combined with improvements in public investment management frameworks, medium-term budget preparation, and fiscal risk management, are critical to underpinning growth and investment," Gopinath noted.
"The authorities continue working to complete their debt restructuring strategy in line with the program's debt sustainability objectives, which is essential to create room for priority expenditures, reduce fiscal risks, and restore debt sustainability," Gopinath said.
"Given still elevated inflation, the tight monetary policy stance is appropriate, and the NBU should stand ready to tighten further should inflation expectations deteriorate.
Greater exchange rate flexibility will help strengthen economic resilience while safeguarding reserves.
The financial sector remains stable, though vigilance is needed given heightened risks.
Operational and governance weaknesses in the security markets regulator need to be tackled urgently," Gopinath added.
"Closing gaps in Ukraine's capital markets infrastructure will be key to attracting foreign private capital for post-war reconstruction.
Sustained progress in anticorruption and governance reforms remains crucial.
The completed audit of the National Anti-Corruption Bureau is an important step, additional efforts are required, including amending the criminal procedures code, appointing the new head of the Economic Security Bureau, and strengthening AML/CFT frameworks," she added. (end)
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