Through Ukraine’s membership of international financial institutions, the NBU actively cooperates with the following institutions: the International Monetary Fund, the World Bank Group, the European Bank for Reconstruction and Development, the Black Sea Trade and Development Bank, and the European Investment Bank.
International Monetary Fund
Ukraine became a member of the IMF in 1992, as set forth in Law of Ukraine No. 2402-XII On Ukraine's Accession to the International Monetary Fund (hereinafter, the IMF), the International Bank for Reconstruction and Development, the International Finance Corporation, the International Development Association, and the Multilateral Investment Guarantee Agency dated 3 June 1992.
The NBU’s Governor is the IMF Governor for Ukraine. On behalf of Ukraine, the governor votes for draft resolutions of the IMF Board of Governors – the highest governing body of the institution – and takes part in the annual meetings of the IMF’s governing bodies. Ukraine’s finance minister is the deputy IMF Governor for Ukraine.
The main areas of Ukraine’s and the NBU’s cooperation with the IMF are as follows: cooperation related to the programs that support the balance of payments (the stand-by arrangement and the extended fund facility), annual consultations under Article IV of the Articles of Agreement of the International Monetary Fund, technical assistance, and other activities envisaged by Ukraine’s membership of the IMF.
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 at mitigating the negative impact of COVID-19. Ukraine received the first tranche of USD 2.1 billion on 11 June 2020. The second tranche of SDR 500 million (about USD 700 million) arrived on 24 November 2021. This financing was used to finance the state budget of Ukraine.
Because of the Russian invasion of Ukraine, Ukraine asked the IMF to terminate the current Stand-By Arrangement and allocate USD 1.4 billion in emergency financial aid to Ukraine under the Rapid Financing Instrument (RFI). The IMF Executive Board made a decision to that effect on 9 March 2022.
The RFI program aims to finance priority expenditures and to address the urgent needs of Ukraine’s balance of payments due to the ongoing war, which if left unmet would result in an immediate and serious economic disruption.
To provide additional support to Ukraine and respond to requests of some IMF member countries (Canada, Poland, the Netherlands, and the regional group of Northern Baltic States), the IMF, on 8 April 2022, approved opening of a special IMF-Administered Account facilitating allocation of funds to support Ukraine. The IMF member countries, their institutions, and international and intergovernmental organizations can credit funds to the account.
As of the end of July, Ukraine received to said account a loan on preferential terms from Canada (USD 773 million in the equivalent) and a grant from Germany (EUR 1 billion).
The World Bank Group is comprised of the following five institutions: the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), the International Development Association (IDA), the Multilateral Investment Guarantee Agency (MIGA), and the International Center for Settlement of Investment Disputes (ICSID).
These institutions aim to provide financial and technical assistance to emerging markets.
Among Ukraine’s international financial partners, the World Bank is the second most important after the IMF.
Ukraine’s finance minister is the World Bank governor for Ukraine, while Ukraine’s first deputy prime minister, who is also Ukraine’s minister of economy, is the World Bank deputy governor for Ukraine. The NBU acts as a depository bank.
Ukraine works together with the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), and the International Development Association.
The funds obtained from these organizations are used to provide financial and technical support to the state budget, implement institutional and structural reforms, and to prepare and implement long-term investment projects that are in line with the priority areas of Ukraine’s economic development.
The NBU, together with the Ukrainian government, works together with the IBRD on systemic projects, under which financing is allocated for the support of the state budget and the implementation of investment projects in Ukraine in order to develop the financial sector.
In the wake of the russian invasion of Ukraine, the World Bank approved in March 2022 additional financing for the IBRD project Economic Recovery Development Policy Loan (ER DPL), which was prepared with participation of the NBU. The loan of almost USD 450 million as part of the additional project funding was used to finance the general fund of the State Budget of Ukraine. Also, to co-finance the project, more than USD 1.3 billion was granted during the first half of the year from the Multi-Donor Trust Fund established by the World Bank.
The total support package mobilized for Ukraine by the World Bank to resist russia’s military aggression amounts to USD 4 billion.
European Bank for Reconstruction and Development
The EBRD is an international financial institution that aims to finance economic reform in Central and Eastern European countries to help these countries transition to a market economy.
Ukraine became an EBRD member in 1992. Ukraine’s finance minister is the EBRD governor for Ukraine, while the NBU’s governor is the EBRD deputy governor for Ukraine.
The EBRD is one of the largest investors in Ukraine, providing considerable support for economic reform in the country. The bank finances investment development projects in the private and public sectors, while also providing technical assistance.
In July 2015, the NBU, together with other regulators of the Ukrainian financial sector – the 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 confirmed their desire to develop the capital market in Ukraine with support from the EBRD. Pursuant to this memorandum, the NBU and the EBRD are implementing a number of technical assistance projects.
In May 2020, the NBU and the EBRD entered into a UAH/USD swap agreement totaling up to USD 500 million. This agreement helped safeguard macrofinancial stability in Ukraine during the global coronavirus crisis, while also providing additional support for the real sector of the economy.
In the wake of the russian invasion of Ukraine, the EBRD Board of Directors in March 2022 approved an initial EUR 2 billion resilience package of measures to help citizens, companies and countries affected by russia’s war against Ukraine. These funds were used to finance existing or new projects, including to support the liquidity of the following companies: Ukrainian Railways, Ukrenergo, Naftogaz, and some other to finance their most urgent needs. As of the end of July 2022, the EBRD invested EUR 650 million in response to the war in Ukraine and is planning to allocate EUR 1 billion by the end of the year.
Other International Financial Institutions
With a view to enhancing the effectiveness of Ukraine’s cooperation with international financial institutions and speeding up the use of loan funds provided by the IFI projects that aim to finance Ukrainian economic development, including through the resumption of bank lending and the development of the financial sector, the NBU and the Ukrainian government work together with other international organizations, such as the European Investment Bank (EIB) (Ukraine is not a member of this organization) and the Black Sea Trade and Development Bank (BSTDB) (Ukraine joined this organization in 1997). Ukraine’s first deputy prime minister, who is also Ukraine’s minister of economy, is the Black Sea Trade and Development Bank governor for Ukraine, while an NBU representative is the Black Sea Trade and Development Bank deputy governor for Ukraine.
The financing provided by these organizations is used to fund investment projects in the public and private sectors of the Ukrainian economy.