IMF Nation Report No. 20/197
REQUEST FOR STAND-BY ARRANGEMENT–PRESS
RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR UKRAINE
Within the context of the Request for Stand-by Association, the next paperwork have been launched and are included on this package deal:
• A Press Launch together with an announcement by the Chair of the Govt Board.
• The Workers Report ready by a workers group of the IMF for the Govt Board’s consideration on June 9, 2020, following discussions that resulted in Could 2020, with the officers of Ukraine on financial developments and insurance policies underpinning the IMF association below the Stand-By Association. Primarily based on data out there on the time of those discussions, the workers report was accomplished on June 2, 2020.
• An Informational Annex ready by the IMF workers.
• A Assertion by the Govt Director for Ukraine.
The paperwork listed under have been or will probably be individually launched:
Letter of Intent despatched to the IMF by the authorities of Ukraine*
Memorandum of Financial and Monetary Insurance policies by the authorities of Ukraine* Technical Memorandum of Understanding*
*Additionally included in Workers Report
The IMF’s transparency coverage permits for the deletion of market-sensitive data and untimely disclosure of the authorities’ coverage intentions in revealed workers reviews and different paperwork.
Copies of this report can be found to the general public from
Worldwide Financial Fund • Publication Companies
PO Field 92780 • Washington, D.C. 20090
Phone: (202) 623-7430 • Fax: (202) 623-7201
Worth: $18.00 per printed copy
Worldwide Financial Fund
© 2020 Worldwide Financial Fund
IMF Govt Board Approves 18-month US$5 Billion Stand-
By Association for Ukraine
FOR IMMEDIATE RELEASE
• The COVID-19 pandemic will bear closely on the Ukrainian financial system in 2020.
• To deal with massive balance-of-payments and monetary financing wants, protect achievements up to now, and advance a small set of key structural reforms to make sure that Ukraine is well- poised to return to development when the disaster ends, the IMF accepted an 18-month Stand-by Association (SBA), with complete entry of about US$5 billion.
• The approval of the SBA allows the quick disbursement of about US$2.1 billion.
WASHINGTON, DC – June 9, 2020. The Govt Board of the Worldwide Financial Fund (IMF) accepted at this time an 18-month Stand-by Association for Ukraine, with entry equal to SDR 3.6 billion (about US$5 billion or 179 p.c of quota). The brand new program goals to assist Ukraine to deal with COVID-19 pandemic challenges by offering stability of funds and finances assist, whereas safeguarding achievements up to now and advancing a small set of key structural reforms, to make sure that Ukraine is well-poised to return to development when the disaster ends.
Ukraine’s monitor report in stabilizing the financial system over the past 5 years has been robust. Nonetheless, extra reforms efforts are wanted to make sure sturdy and inclusive development. The outbreak of the COVID-19 pandemic has considerably worsened the outlook and has refocused authorities insurance policies on containment and stabilization. Uncertainty is massive, and the financial system is projected to contract sharply in 2020 as strict containment measures-in Ukraine and globally-led to sizable falls in home and exterior demand. The 2020 finances is predicted to be hit exhausting, with a pointy decline in revenues and huge emergency spending wants to handle the disaster. This has created massive balance-of-payments and monetary financing wants.
The brand new association succeeds the 14-month SBA that was accepted in December 2018, which was targeted on sustaining stability in the course of the election 12 months (see Press Launch No 18/483). Insurance policies below the brand new association will deal with 4 priorities: (i) mitigating the financial influence of the disaster, together with by supporting households and companies; (ii) guaranteeing continued central financial institution independence and a versatile alternate charge; (iii) safeguarding monetary stability whereas recovering the prices from financial institution resolutions; and (iv) transferring ahead with key governance and anti-corruption measures to protect and deepen latest positive factors.
The approval of the SBA allows the quick disbursement of the equal of SDR 1.5 billion (about US$2.1 billion). The rest will probably be phased over 4 opinions.
The Govt Board additionally mentioned the ex-post analysis of remarkable entry below Ukraine’s 2015 prolonged association below the Prolonged Fund Facility (EFF), which concluded that the prolonged association helped restore macroeconomic stability and development however didn’t absolutely deal with Ukraine’s underlying stability of funds vulnerabilities.
Following the Govt Board’s dialogue on Ukraine, Ms. Kristalina Georgieva, Managing Director and Chair, issued the next assertion:
“Sound fiscal and financial insurance policies because the 2014-15 disaster have resulted in a pointy discount in Ukraine’s exterior and inside imbalances. Public debt was placed on a downward path, inflation has declined, and worldwide reserves have recovered. As famous by the Ex-Put up Analysis of Distinctive Entry below the 2015 Prolonged Facility, whereas development resumed, reform implementation has been uneven and steadfast implementation of structural reforms will probably be wanted to create a extra dynamic and aggressive financial system. At current, the humanitarian and financial disaster stemming from the COVID-19 pandemic, has refocused coverage priorities away from deep structural reforms.
“The brand new Stand-By Association will present an anchor for the authorities’ efforts to handle the influence of the disaster, whereas guaranteeing macroeconomic stability and safeguarding achievements up to now. Along with assist from the World Financial institution and the European Union, it should assist deal with massive financing wants. This system will deal with safeguarding medium-term fiscal sustainability, preserving central financial institution independence and the versatile alternate charge, and enhancing monetary stability whereas recovering the prices from financial institution resolutions. Concerted reform efforts geared toward tackling corruption and strengthening governance will probably be crucial to make sure macroeconomic stability and obtain sustainable and inclusive development.
“The dangers to the brand new program are very massive. The uncertainty concerning the severity and size of the worldwide downturn is exceptionally excessive. On the home facet, uncertainty concerning the course of financial insurance policies stays substantial.
“Public debt stays excessive and authorities financing wants are massive. Whereas fiscal insurance policies below this system will initially be directed at addressing the influence of the disaster, fiscal coverage will should be tightened because the restoration units in, to put public debt again on a downward path.
“The Nationwide Financial institution of Ukraine (NBU) has skillfully managed financial coverage throughout a really difficult interval. Central Financial institution independence needs to be preserved, and financial and alternate charge insurance policies ought to proceed to offer a secure anchor within the context of the inflation-targeting regime, whereas permitting orderly alternate charge adjustment and stopping liquidity stress. Monetary insurance policies ought to strike a stability between preserving monetary stability and helping the restoration.
“Full and well timed implementation of insurance policies below the Fund-supported program will probably be crucial to mitigate financial dangers and lay the bottom for stabilization and restoration.”
IMF Lending Tracker (emergency financing request accepted by the IMF Govt Board) https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker
IMF Govt Board calendar https://www.imf.org/external/NP/SEC/bc/eng/index.aspx
Ukraine: Chosen Financial Indicators, 2018−2022
Actual financial system (p.c change, until in any other case indicated)
Nominal GDP (billions of Ukrainian hryvnias)
Actual GDP 1/ 3.2 -8.2 3.Zero Contributions to actual GDP development
Client costs (interval common) Nominal month-to-month wages (common) Unemployment charge (ILO definition; p.c)
Public finance (p.c of GDP)
Basic authorities stability 2/
Public and publicly assured debt 60.6 50.4 65.4 62.7 60.5
Cash and credit score (finish of interval, p.c change)
Broad cash 5.7 12.6 4.0 11.0 12.5
Credit score to nongovernment -9.8 -7.3
Interbank o/n charge (annual common, p.c)
Stability of funds (p.c of GDP)
Present account stability
International direct funding Whole exterior debt
Gross reserves (finish of interval, billions of US$)Months of subsequent 12 months’s imports of products and companies3.1
P.c of IMF composite metric (float)
Hryvnia per U.S. greenback (finish of interval)
Actual efficient charge (deflator-based, p.c change)
3561 3975 3908 4659
9.Zero 8.5 12.6 12.0
0.0 -2.0 -7.7 -5.3
-0.7 -2.0 -1.9
Sources: Ukrainian authorities and IMF workers estimates.
1/ Information primarily based on SNA 2008, exclude Crimea and Sevastopol.
2/ The final authorities contains the central and native governments and the social funds.