10:01 11.10.2023

Ukrainian delegation holds negotiations with heads of IMF, World Bank on financing in 2024 – Minister of Finance

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Ukrainian delegation holds negotiations with heads of IMF, World Bank on financing in 2024 – Minister of Finance

Minister of Finance of Ukraine Serhiy Marchenko, together with the Ukrainian delegation, held talks with the new President of the World Bank, Ajay Banga, and Managing Director of the International Monetary Fund (IMF) Kristina Georgieva, as well as the leaders and teams of these organizations, as part of the Annual Meetings of the World Bank Group and the IMF, started in Morocco.

"The key task at this year's meetings is to secure financial assistance for next year. After all, the need for external financing for 2024 is projected at almost $43 billion," he wrote on Facebook on Wednesday night.

Marchenko said that further cooperation with the World Bank and the IMF is one of Ukraine's key priorities. He recalled that after the outbreak of the full-scale war, these international financial institutions demonstrated leadership in supporting Ukraine, which made it possible, in conditions of extreme uncertainty, to carry out all priority expenditures of the state budget.

The minister said that, as part of the financial resources mobilized by the World Bank, since February 24, 2022, the state budget of Ukraine has already received loan and grant funds worth more than $26 billion, including through the mechanisms of trust funds of many donors.

He added that the Ministry of Finance and the World Bank recently reviewed the project portfolio of the bank's existing projects in Ukraine for the first time since 2021: for 2022-2023, its volume is the largest in all years of cooperation and consists of 20 ongoing projects totaling more than $5.5 billion and EUR 1 billion in loan funds and about $22 billion in grant funds, in particular within the framework of the PEACE in Ukraine, SDPL, Re-Power, RELINC, and Heal projects.

As the Ministry of Finance said on its website, the parties discussed the sources of financing for the State Budget 2024, the continuation of joint projects and the launch of new ones for the restoration of Ukraine.

Marchenko said that the Ukrainian government predicts active hostilities to continue next year and, as a result, defense spending to remain at the current year's level.

The minister added that although reconstruction is one of the governmen's priorities, the first one is to finance all urgent expenditures of the State Budget, namely social protection and humanitarian aid.

Representatives of the World Bank assured of continued support for Ukraine to strengthen its economic resilience.

According to the Ministry of Finance, at the meeting with the IMF they discussed the economic situation in Ukraine, the state of cooperation and the implementation of the Extended Fund Facility (EFF) by the Ukrainian side, under which Ukraine expects to receive the third tranche of about $895 million by the end of the year, subject to a successful second revision of the program.

In total, since the beginning of the full-scale war, the Ministry of Finance has attracted about $6.3 billion in budget support from the IMF, the ministry said.

Among the key areas of reform identified in cooperation with the IMF under the EFF program are: strengthening macro-financial resilience, structural fiscal policy, fiscal transparency, strengthening public investment management, economic deregulation and improving the business climate, strengthening the fight against corruption, and energy sector reform.

Marchenko said that the Ukrainian economy continues to function fully, despite the challenges of the war. This year, GDP is expected to grow, inflation has been declining for nine months in a row, and tax revenues to the budget have returned to pre-war levels.

As the Ministry of Finance reported, this is facilitated by the significant support of international partners: in 2023, external financing already reaches $32.6 billion, and from February 24, 2022 it was $63.7 billion.

"At the same time, there is a significant need for financing for next year. The state budget deficit is projected at $42.9 billion," the Minister of Finance said.

The meetings were also attended by Deputy Ministers of Finance Olha Zykova and Yuriy Drahanchuk, government commissioner for public debt management Yuriy Butsa, Governor of the National Bank of Ukraine Andriy Pyshnyy, and other representatives of the central bank.

Marchenko also said that this time he represents Ukraine as Chair of the Boards of Governors of the World Bank and the IMF.

"This is an opportunity to update Ukrainian issues at the highest level of the financial establishment, which is especially important now, in the context of global turmoil. Ukraine's victory and continued support must remain key in the global agenda, since the future of Ukraine determines the future of the civilized world," he said.

"We have a busy week ahead in Morocco, with dozens of high-level meetings and speeches to mobilize support from partners," the minister added.