On 29 June 2023, the Executive Board of the International Monetary Fund (IMF) completed the first review under the Extended Fund Facility (EFF) Arrangement for Ukraine (Extended Fund Facility, EFF) and enabled a purchase by Ukraine of SDR 663.9 billion (or about USD 886 billion).
The funds will be channeled for budget support. Furthermore, this money will support Ukraine’s international reserves, which will strengthen the NBU’s capacity to ensure the stability of the FX market.
The IMF management agreed that the effective policies of the Ukrainian authorities and stable external support helped ensure macroeconomic and financial stability amidst a full-scale war.
The Ukrainian economy demonstrates greater resilience than predicted. Inflation is decreasing at a fast pace, and the volumes of international reserves have been increasing. Considering the above, the International Monetary Fund improved the growth forecast of the Ukrainian economy this year to the range of 1-3%.
Special praise was given to Ukraine's progress in meeting its commitments under the EFF despite the challenges and hardship of a full-scale war.
Ukraine completed all structural benchmarks for the period until the end of June. Furthermore, all continuous and end-April quantitative performance criteria under the program were met.
The IMF management also commended the determination of the Ukrainian authorities to strictly adhere to the terms of the EFF program, emphasizing that sustained ownership and reform momentum in the challenging period ahead are essential to safeguard macroeconomic and financial stability.
The International Monetary Fund welcomed the important steps undertaken by Ukraine to strengthen fiscal, external, price, and financial stability. Specifically, as previously planned, the NBU has launched the assessment of the banking sector’s condition, and has also approved the conditions-based Strategy for easing FX restrictions, moving to a flexible exchange rate going forward, and returning to inflation targeting. The preparation of this strategy was a structural benchmark for end-June 2023 and it has been met.
Furthermore, Ukraine has shown sustained strong reform implementation momentum in:
- fight against corruption and money laundering
- management of public finances, public administration, and investments
- implementation of risk-based supervision in the financial sector.
Such steps are key to the country’s rapid post-war recovery, sustainable economic growth, and further accession to the EU.
"Having fulfilled all of our commitments in time, we successfully passed the first review of the Extended Fund Facility program. As a result, we have another tranche, further support from partners, and a clear vision of our development.
I am grateful to my colleagues for their productive work, and to the International Monetary Fund for its financial, political, and expert assistance," said NBU Governor Andriy Pyshnyy.
The IMF Executive Board’s decision to approve the first review of the program was preceded by a Staff-Level Agreement (SLA) reached on 30 May 2023.
On 31 March 2023, the IMF Executive Board approved a four-year Extended Fund Facility arrangement for Ukraine for SDR 11.6 billion in aid (equivalent to about USD 15.6 billion). The IMF Executive Board’s decision allowed for immediate disbursement of around SDR 2 billion (or USD 2.7 billion).
This arrangement is part of a USD 115 billion total support package from international partners that is designated for Ukraine.
In view of exceptionally high uncertainty over the war russia is waging on Ukraine, the EFF program envisions a two-phased approach. In the first phase, our efforts will be centered around maintaining macroeconomic and financial stability in wartime to strengthen Ukraine’s capacity as the country makes its way towards Victory. The second, post-war, phase of the program will shift focus to more ambitious structural reforms to entrench macroeconomic and financial stability, support the post-war reconstruction, promote sustainable long-term growth, and support reforms to accelerate Ukraine’s EU accession.