The National Bank of Ukraine (NBU) welcomes the International Monetary Fund (IMF) Executive Board approval of the next tranche of financial assistance to Ukraine to the value of $1 billion.
This is the fourth instalment under the IMF’s four-year Extended Fund Facility to Ukraine, highlighting the success of reforms to create a stronger, more sustainable financial system and economy. It is the most successful IMF programme in Ukraine’s history.
This latest tranche of IMF finance was conditional, in particular, upon Ukraine making major progress toward a clean and stable banking system. The joint government and NBU decision on state participation in the recapitalization of PrivatBank, led by NBU Governor Valeria Gontareva and Minister of Finance Oleksandr Danyliuk, at the end of 2016 was a particularly important milestone in securing further funds from the IMF. Supported by foreign creditors including the IMF, the World Bank, the European Bank for Reconstruction and Development and the G7, it has been widely heralded as an international example of best practice for resolving a systemic financial institution.
Commenting on the news, Ms.Gontareva said: “I am deeply encouraged by the IMF’s decision on the disbursement of the fourth tranche of funding provided under the EFF program to replenish international reserves and, consequently, to strengthen Ukraine’s financial stability. This is a real vote of confidence from the international financial community.
“I know I speak for all at the NBU when I say that I am proud that our tireless work towards a large-scale clean up and restructuring of our banking sector contributed to this success. This will send a clear message to those who have sought to unlawfully exploit the banking sector to their own advantage. It will also benefit Ukrainians for many generations to come.
“Our rigorous stress tests for top banks, commitment to improving standards and decisive action where necessary – most recently with the successful nationalisation of PrivatBank – have all played a part in ensuring the stability of our financial system. The NBU will continue to work towards ensuring that all banks in Ukraine operate at the highest level of regulatory best practice and transparency, which we believe to be imperative to drive strong and sustainable growth for Ukraine.”
The decision to disburse the next loan tranche was approved following some further analysis carried out by IMF experts to assess the potential impact of a trade blockade on Ukrainian economy and update macroeconomic forecasts taking into consideration the estimates provided by the NBU and the Ministry of Finance of Ukraine. The IMF experts concluded that the trade blockade would have a relatively moderate impact on economic growth and the balance of payments and it would not put the NBU’s inflation target at risk.