13:56 08.03.2023

IMF mission starts discussions with Ukraine on potential program

3 min read
IMF mission starts discussions with Ukraine on potential program

On Wednesday, the mission of the International Monetary Fund (IMF) starts discussions with representatives of Ukraine on a new full-fledged Fund-supported program.

"An IMF mission, led by Gavin Gray, starts policy discussions today with the Ukrainian authorities on a potential Fund-supported program," Resident Representative to Ukraine Vahram Stepanyan said in a statement.

"Representatives of the Ministry of Finance of Ukraine, the National Bank of Ukraine, as well as other bodies responsible for the economy, energy policies, the struggle and prevention of corruption, the rule of law, take part from the Ukrainian side in the discussions. Meetings are held in the city of Warsaw, Poland, as well as online," the Ministry of Finance said.

Governor of the National Bank Andriy Pyshnyy said on Facebook that his deputies Serhiy Nikolaychuk, Yuriy Heletiy and Dmytro Oliynik are already working in Warsaw, and he will join them a few days later.

"We begin the discussion already with a certain vision of the program parameters and have arguments for each of them. Our team has been well prepared for discussions and is charged to the result that will strengthen Ukraine," the governor of the NBU said.

Earlier, Minister of Finance of Ukraine Serhiy Marchenko announced the work of the IMF mission from March 8 to March 15 in Warsaw. "There we will agree on the conditions, the content, volumes, and so on. Now, it is too early to talk about specific details because there are many issues of the Fund's internal discussion," the Minister of Finance said on March 1.

"I think we will find the necessary solutions so that, starting from April, we have a full-fledged program with the Fund," Marchenko said.

According to him, Ukraine and the Fund discuss a four-year program, the task of which is to carry out the necessary correction of policies so that Ukraine, which today spends 50% of the budget on the military, and the other 50% is financed through the help of partners after the war reached the level of "more than less" self-sustaining.

Prime Minister Denys Shmyhal said that the size of the program could be $15 billion, of which Ukraine would like to receive $5 billion this year.

As reported, Ukraine, in the face of the IMF's unwillingness to immediately provide significant funding in the autumn of last year, requested a four-month Program Monitoring with Board Involvement (PMB), which the Fund approved on December 20.

On February 17, the IMF mission completed its work in Warsaw, following which a statement on reaching a staff-level agreement (SLA) on the early termination of this program and the transition to the preparation of a new Extended Fund Facility (EFF) was made.

Kyiv hopes that the PMB will be replaced by a multi-year EFF of about $15 billion at the beginning of the second quarter of 2023, which can cover the gap to cover the $38 billion deficit of the 2023 state budget, which now is about $5-10 billion.