IMF, Ukraine reach staff-level agreement on $700M loan

That’s according to an official statement by the IMF, released Monday evening, Ukrinform reports.

“IMF staff team and Ukrainian authorities reached a staff-level agreement on policies to support the country’s reforms in the context of the Stand-by Arrangement (SBA),” the statement says.

The press service notes the move paves the way for consideration of the first review of the Stand-By Arrangement (SBA) and request for an extension of the program by the IMF’s Executive Board.

“Completion of the first review would enable disbursement of SDR 500 million (about US$ 700 million),” the statement reads.

The agreement covers “an updated set of economic, financial, and structural policies to help address the economic and health crisis caused by COVID-19, while maintaining macroeconomic and financial stability, reducing vulnerabilities, and tackling key obstacles to private investment.”

The program’s focus is on five main directions.

First, it is about returning fiscal policies to settings consistent with medium-term debt sustainability while protecting the socially vulnerable, strengthening revenue administration, and reducing fiscal risks. Secondly, it is about safeguarding central bank independence and focusing monetary policy on returning inflation to its target.

Thirdly, it’s about ensuring banks’ financial health, including through good governance, with the goal of reviving sound bank lending to the private sector;

Fourthly, this is about tackling corruption and pushing forward with the implementation of judicial reform.

And Fifthly, it’s about reducing the role of the state and vested interests in the economy to improve the business environment, strengthen corporate governance, attract investment and raise the economy’s potential.

“The agreement as well as the authorities’ request for program extension to end-June 2022 are subject to approval by Fund Management and the IMF Executive Board. Continued steadfast implementation of strong policies in these areas, consistent with objectives under the program and agreed commitments, will pave the way for the IMF Executive Board’s consideration of the review, expected in November,” the IMF said.

In turn, President Volodymyr Zelensky expects that the IMF Executive Board will approve the staff-level agreement on allocating $700 million for Ukraine this November.

“Ukraine and IMF reached a staff-level agreement to complete the first review of the Stand-By Arrangement. I expect the IMF Executive Board to approve this agreement in November. This will allow Ukraine to receive about $700 million and once again confirm our close cooperation,” Zelensky tweeted.

Memo

Ukraine’s 18-month SBA with an access of SDR 3.6 billion (equivalent to US$5 billion) was approved on June 9, 2020, to provide balance of payments and budget support to help the authorities address the effects of the COVID-19 shock, while consolidating achievements, and moving forward on important structural reforms to reduce key vulnerabilities. The first batch of assistance worth $2.1 billion was allocated under the SBA immediately.

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