In the framework of Ukraine’s membership in international financial institutions, the National Bank of Ukraine actively cooperates with the following institutions: International Monetary Fund, World Bank Group, European Bank for Reconstruction and Development, Black Sea Trade and Development Bank, European Investment Bank.
International Monetary Fund
Ukraine became a member of the IMF in 1992 according to Law of Ukraine No. 2402-XII On Ukraine's Accession to the International Monetary Fund, International Bank for Reconstruction and Development, International Finance Corporation, International Development Association, and Multilateral Investment Guarantee Agency dated 3 June 1992.
The NBU Governor is the Governor for Ukraine of the International Monetary Fund. On behalf of Ukraine, he/she votes for draft resolutions of the IMF board of governors, the highest governing body of the institution, and takes part in annual meetings of the Fund’s governing bodies.
The main areas of cooperation of Ukraine and the NBU with the IMF are under arrangements of balance of payments support (stand-by and Extended Fund Facility), annual consultations in the framework of Article IV of the Articles of Agreement of the International Monetary Fund, technical assistance, and the implementation of other activities in the framework of Ukraine’s membership.
In June 2020, the IMF approved a new 18-month Stand-By Arrangement in the amount of about USD 5 billion, aimed at state budget support, namely, mitigating the negative impact of COVID-19. The first tranche of USD 2.1 billion Ukraine received on 11 June 2020.
The implementation of a new arrangement will promote the continuation of important structural reforms in the spheres of fiscal and monetary policies and the financial sector, as well as the introduction of new important structural reforms in the energy sector, state property management, and combating corruption. We expect that the current program will enable access to financial support from Ukraine’s other international partners, in particular, the World Bank, the EU and other countries of the world. Measures for reforms are included into the Memorandum on Economic and Financial Policy.
It is important for the IMF that the NBU maintain its independence, a monetary policy in inflation-targeting mode, and a flexible exchange rate, as well as pursue a financial policy that helps in maintaining a balance between financial stability and supporting the economy.
According to the IMF rules and procedures, the successful implementation of a program is a country’s fulfillment of structural benchmarks and quantitative performance criteria.
The structural benchmarks related to the financial sector include: a more effective fight against high-level, non-performing loans in the banking system, the further improvement of banking legislation and a mechanism of bank liquidation and the recovery of assets of the resolved banks.
Ukraine and, in particular, the NBU are making their best efforts and are gradually progressing to reach the full completion of benchmarks under the current program.
The quantitative performance criteria are met by the NBU on a regular basis and together with benchmarks they are included into the framework of implementation of Memorandum on Economic and Financial Policy..
The World Bank Group comprises of five institutions: International Bank for Reconstruction and Development (IBRD); International Finance Corporation (IFC); International Development Association (IDA); Multilateral Investment Guarantee Agency (MIGA); International Centre for Settlement of Investment Disputes (ICSID).
The activities of these institutions are aimed at providing financial and technical assistance to developing countries.
Among the international financial institutions, the World Bank is the second-most important financial partner of Ukraine, after the IMF.
Ukraine cooperates with the IBRD and IFC.
The resources of these organizations are used for the financial and technical support of the state budget, the implementation of institutional and structural reforms, and the preparation and implementation of long-term investment projects within the priority areas of Ukraine’s economic development.
The NBU, together with the Ukrainian government, cooperates with the IBRD in the framework of systemic projects, the funds of which are allocated for the support of the state budget for the purposes of structural reforms implementation. Also we take part in the development and implementation of IBRD investment projects in Ukraine aimed at financial sector development.
Upon completion by Ukraine of the prior actions, the IBRD project Economic Recovery Development Policy Loan - ER DPL in a total amount of USD 700 million was approved in June 2020 by the World Bank board of directors. The loan will be provided in two installments of USD 350 million each. The NBU has successfully performed the prior actions on financial sector reform in the framework of ER DPL, specifically the regulation of nonperforming loans and the introduction of reforms in the regulation of the nonbank financial market in Ukraine (the SPLIT reform).
European Bank for Reconstruction and Development
EBRD is the international financial institution established for the funding of economic reforms in the countries of the Central and Eastern Europe with the goal of their transition to a market economy.
Ukraine is the EBRD member since 1992. The Governor of the National Bank of Ukraine is a Deputy Governor for Ukraine in this organization. The Governor for Ukraine is the Minister of Finance of Ukraine.
The EBRD is one of the biggest investors in Ukraine with its financial resources offering considerable support for economic reforms in Ukraine. The NBU grants funding to investment projects of development in the private and public sectors, and also provides technical assistance.
In July 2015, the NBU together with the other regulators of the Ukrainian financial sector – Ministry of Finance and the National Securities and Stock Market Commission – signed with the EBRD a memorandum of understanding on cooperation in developing local capital markets. The parties have confirmed their endeavor to develop the capital market in Ukraine under EBRD support. Pursuant to this memorandum, the NBU and the EBRD shall implement a number of technical assistance projects.
In May 2020, the NBU and the EBRD entered into the Currency UAH/USD Swap Agreement totaling up to USD 500 million. It will enable enhancing macrofinancial stability in Ukraine in times of global crisis caused by the coronavirus pandemic, and also increasing support for the real economy.
Other International Financial Institutions
In order to enhance the effectiveness of cooperation of Ukraine with international financial institutions, and to improve the use of loan funds under IFI projects aimed at Ukrainian economic development, including the resumption of bank lending and the development of the financial sector, the NBU cooperates with the Ukrainian government and such international organizations as the European Investment Bank (EIB) and the Black Sea Trade & Development Bank (BSTDB).
The resources of these organizations are used for funding investment projects in the state and private sectors of the Ukrainian economy.