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Staff Level Agreement with IMF Reached on First Review of Extended Fund Facility Arrangement

Staff Level Agreement with IMF Reached on First Review of Extended Fund Facility Arrangement

The IMF’s mission, which worked in Vienna from 23 to 30 May 2023, has completed their work regarding the first review of the Extended Fund Facility (EFF) Arrangement for Ukraine. 

The mission’s work has resulted in reaching the Staff-Level Agreement (SLA) on Ukraine’s meeting the EFF terms and on an updated set of economic and financial policies. The agreement is subject to approval by the IMF Executive Board, with the Board consideration expected in the coming weeks. 

As Ukraine has met all quantitative performance criteria for end-April and structural benchmarks through end-May set by the Memorandum of Economic and Financial Policies, the IMF Executive Board will consider disbursement of SDR 663.9 million (USD 900 million) as the second tranche.

During the work of the mission, IMF experts got assured that Ukraine is taking important steps to strengthen fiscal, external, price and financial stability, including preparing a strategy to loosen FX controls and move to a more flexible exchange rate going forward, preparing a deeper assessment of the health of the banking sector, and continuing reforms to strengthen governance and anti-corruption frameworks, including through legislative changes. 

Within the updated set of economic and financial policies, Ukraine will continue to implement structural reforms. They will cover the areas of governance, anti-corruption and anti-money laundering, public finance and investment management, and further implementation of risk-based supervision in the financial sector. They will create an enabling environment for sustainable growth and the recovery and reconstruction efforts, as well as help foster private-sector investment. Such reforms will also help facilitate EU accession.

Despite the list of economic and financial policy measures having been updated after the first EFF review, the general objectives of the EFF remain unchanged. The program is intended to strengthen Ukraine's capabilities as it makes its way towards Victory, including by maintaining Ukraine's economic and financial stability in the face of exceptionally high uncertainty, restoring the sustainability of debt, and facilitating Ukraine's recovery on the path to EU accession in the post-war period. 

In the course of the first review, IMF experts highly appreciated the extraordinary resilience of the Ukrainian economy. Specifically, although the full-scale war grinds on and russia's devastating attacks on Ukraine's energy infrastructure continue, economic activity picked up in Q1 2023 as the energy system quickly recovered from damage to infrastructure, the FX market stabilized, and inflation returned to a steady decline. 

With this in mind, IMF staff are expecting a stronger recovery of the Ukrainian economy. They have upgraded their estimate of Ukraine's real GDP growth for 2023 to a range of +1% to +3%, up from the previous estimate of between -3% and +1% made at the time of the EFF's approval.

"We have successfully passed the first test: all structural benchmarks pertaining to the EFF's first review have been met. Missile attacks and the enemy onslaught have not deterred us. Nor will they, going forward. Our financial stronghold stands unbroken and unbreakable. We have what it takes to continue to endure. I am grateful to IMF colleagues for their effective cooperation. Let's keep up the good work," said NBU Governor Andriy Pyshnyy. 

For reference:

On 31 March 2023, the IMF Executive Board approved a four-year Extended Fund Facility arrangement for Ukraine

The program is being implemented in two stages (wartime and post-war). It provides access to SDR 11.6 billion (an equivalent of USD 15.6 billion). 

Disbursements under the program will be conditional on the results of quarterly reviews. This year, Ukraine stands to receive a total of SDR 3.3 billion (equivalent to USD 4.5 billion) in three disbursements. That includes the SDR 2 billion (equivalent to USD 2.7 billion) that Ukraine received in April.

This arrangement is part of a USD 115 billion total support package from international partners that is designated for Ukraine. Obtaining appropriate financial assurances from international partners has been a result of joint efforts in recent months by the President of Ukraine, the government of Ukraine, the NBU, and the IMF.


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