The International Monetary Fund (IMF) warned Ukraine against creating a state holding company that would unite all state-owned enterprises, as it considers such a decision premature due to financial and potential management risks.

"The establishment of an SOE holding company is premature at this stage in view of the fiscal and potential governance risks. Instead, staff sees merit in exploring options to strengthen SOE management through the existing SOE corporate governance reform agenda," the IMF said in the materials of the second review of the Extended Fund Facility EFF arrangement for Ukraine, published by the IMF.

Drawing on best practices, the scope and mandate of SOE management should be clearly defined, including the roles and mandates of key government institutions. The following well-sequenced SOE reform agenda should be adhered to in close consultation with international partners, including: passing the SOE corporate governance law No. 5593-D; implementing related secondary legislation; as an interim step, assessing the financial conditions and fiscal risks of the SOEs in the state ownership policy by end-March 2024; and producing a comprehensive state ownership as well as dividend policy and a privatization strategy (Proposed Structural Benchmark, end-August 2024).

The IMF also said that the current legal framework for virtual assets could pose risks to price stability and the effectiveness of monetary transmission. The National Bank of Ukraine (NBU) and the National Securities and Stock Market Commission (NSSMC) will prepare an update of the legislation by end-June 2024 to align with international best practice while considering economic development goals and mitigating price and financial stability risks.

As reported, the updated Memorandum of Financial and Economic Policies has 12 new structural benchmarks.