A Staff Level Agreement on a new Extended Fund Facility (EFF) Arrangement was reached based on the outcomes of the IMF mission that worked in Warsaw during 8-15 March 2023 and online consultations that followed. The program is subject to approval by the IMF Executive Board.
The program is designed for four years, with requested access of SDR 11.6 billion (about USD 15.6 billion). It aims to sustain fiscal, external, price, and financial stability and support the gradual economic recovery of Ukraine in the context of post-war reconstruction and Ukraine’s path to EU accession.
In view of the exceptionally high uncertainty due to the war russia is waging on Ukraine, the EFF program envisions a two-phased approach.
The first phase will focus on strengthening fiscal, external, price, and financial stability by
- bolstering revenue mobilization
- eliminating monetary financing and ensuring net positive financing from domestic debt markets, and
- contributing to long-term financial stability, including by preparing a deeper assessment of the banking sector health and continuing to promote central bank independence.
The program also envisages continuing reforms to strengthen governance and anti-corruption frameworks, including through legislative changes.
This phase, currently envisioned during the first 12–18 months of the program, will build on the Program Monitoring with Board Involvement.
The second phase would shift focus to more expansive reforms to entrench macroeconomic stability, support the recovery and early reconstruction of Ukraine, and enhance resilience and higher long-term growth, including in the context of Ukraine’s EU accession goals.
During the second phase, the NBU would be expected to revert to pre-war monetary policy frameworks, including a flexible exchange rate and inflation targeting regime, provided the relevant prerequisites are met. In addition, fiscal policies would focus on critical structural reforms to anchor medium-term revenues through the implementation of a national revenue strategy, together with public finance and public investment management reforms to support post-war reconstruction. Enhancing competition in the vital energy market, while reducing quasi-fiscal liabilities would complement the post-war reform efforts.
The staff-level agreement reflects the IMF’s continued commitment to support Ukraine and is expected to help mobilize large-scale concessional financing from Ukraine’s international donors and partners. This agreement is subject to approval by the IMF Executive Board, with Board consideration expected in the coming weeks.
"The PMB, which was accompanied by a certain amount of skepticism due to the absence of financing, has turned out to be not only the groundwork for the transition to the USD 15.6 billion EFF Arrangement, but also an incentive for the IMF to revise its approaches and policies amid high uncertainty. Having successfully passed the PMB, Ukraine proved its ability to meet its commitments. This also changed the Fund's lending policy. Going forward, other countries may also benefit from this change.
International partners stand with Ukraine and are willing to help us. They see the incredible adaptability of our economy, which has survived multiple attacks on critical infrastructure. The global community is also convinced that we are committed to meet our obligations, ensure macroeconomic and financial stability, implement the necessary reforms, and stay on the course to EU accession. We have lots of hard work ahead of us, but we will manage to do it. We will have victory," said NBU Governor Andriy Pyshnyy.