Today, on March 27, speaking at a joint press conference held at the National Bank of Ukraine, Governor of the National Bank of Ukraine Stepan Kubiv and Mission Chief for Ukraine Nikolay Gueorguiev announced a staff-level agreement reached between Ukraine and the IMF on the economic reform program that could be supported by a two-year Stand-By Arrangement (SBA) worth USD 14-18 billion. The agreement reached with the authorities is subject to approval by IMF Management and the Executive Board.

Mr Stepan Kubiv thanked the IMF mission team for their efforts to conduct a constructive dialogue with the Ukrainian authorities over the past three weeks.

“Our cooperation has been absolutely transparent; we have provided all the information required for the assessment of the current economic situation in Ukraine and laid out our vision for the development prospects, claimed to have abandoned the pegged exchange rate and unveiled our plans to make alterations to the monetary policy and shift to a new monetary policy framework, which falls within the mandate of the National Bank of Ukraine,” said Mr Stepan Kubiv.

In addition to this, Mr Stepan Kubiv pointed out that the National Bank and the IMF had a common understanding of the ways to stabilize the financial system of Ukraine, in particular, the foreign exchange and money markets.

“The maintenance of a flexible exchange rate and adoption of a new monetary regime will eventually be based on a different approach, specifically, on an inflation targeting framework and the use of the interest rate setting as a key tool of the monetary policy,” said Mr Stepan Kubiv adding that several priority areas for the National Bank of Ukraine had been identified under this framework. The open and transparent monetary policy decision-making process, dialogue with banks and society, transparency and greater public access to the decisions adopted by the National Bank of Ukraine are among the top priorities.

“We have had a lot of problems over the years of Ukraine’s independence and now the time is ripe to make effective and efficient decisions, alterations and carry out reforms. The reforms will focus on a proper monitoring of liquidity, ensuring the soundness of banks in the financial market and, if required, carrying out the recapitalization of banks whose performance requires prompt action,” Mr Stepan Kubiv emphasized. The Board of the National Bank of Ukraine has adopted a decision to set up a Group of highly qualified experts in order to develop the Banking Sector Development Strategy for the period 2014-2020, which will be focused on upgrading the supervisory framework of the NBU and facilitating resolution of non-performing assets in the banking sector.

For his part, Mr Nikolay Gueorguiev, Mission Chief for Ukraine, thanked the Governor of the National Bank of Ukraine and the Government of Ukraine for the frank dialogue and constructive cooperation with the IMF mission team. According to him, an understanding had been reached between the IMF mission and the Ukrainian authorities on the economic reform program that could be supported by a Stand-By Arrangement (SBA).

Thus, the financial support from the broader international community will amount to USD 27 billion over the next two years. Of this, assistance from the IMF will range between USD 14-18 billion.

“The agreement reached with the authorities is subject to approval by IMF Management and the Executive Board. Consideration by the Executive Board is expected in April. The Ukrainian authorities are to adopt a strong and comprehensive package of prior actions aiming to stabilize the economy and create conditions for sustained growth,” said Mr Nikolay Gueorguiev.

The Mission Chief for Ukraine said that the Ukrainian authorities should focus their efforts on implementing reforms in the following key areas: monetary and exchange rate policies; the financial sector; fiscal and budget policies; the energy sector; while protecting the vulnerable in the society. Ukraine should also clamp down on corruption and create a favorable investment climate.

According to Mr Stepan Kubiv, the financial aid program offered by the IMF and other international organizations will provide a powerful impetus to Ukraine’s economy and act as a “trigger” to unlock financing from other financial institutions.

“The new IMF program will unlock and change the situation in the economy and the financial market of Ukraine for the better. We will restore public confidence in the banking system and make the operation of all banks transparent and accountable not only today, but also in the future,” he emphasized.

An International Monetary Fund (IMF) mission worked in Kyiv during March 4-26, 2014, to assess the current economic situation in Ukraine and discuss the authorities’ economic reform program.