IMF approves $400 mn tranche to Ukraine

EghtesadOnline: 

Executive Board of the International Monetary Fund (IMF) has completed the Seventh Review of the Extended Arrangement under the Extended Fund Facility (EFF) for Ukraine, which provides Ukraine with another tranche worth $400 mln, the IMF press service said in a statement.

"The IMF Board today completed the Seventh Review of the Extended Arrangement under the Extended Fund Facility (EFF) for Ukraine, enabling a disbursement of about $0.4 billion to Ukraine, which will be channeled for budget support," the statement reads. This will bring the total disbursements under the IMF-supported program to $10.1 billion, according to TASS.

"Sustained reform momentum, progress at domestic revenue mobilization, as well as full and timely disbursement of external support during the program period are necessary to safeguard macroeconomic stability, restore fiscal and debt sustainability, and improve governance," according to the Fund, which greenlighted a four-year program under the EFF mechanism with financing worth $15.5 bln for Ukraine in 2023.

"The slowdown [in Ukraine] is expected to continue in 2025," the IMF noted. In particular, the country’s GDP is projected at 2-3% this year, at 4.5% in 2026, and 4.8% in 2027. Unemployment totals 11.6% in 2025, and the Fund’s experts expect it to decline to 10.2% in 2026, and to 9.4% in 2027.

"The program remains fully financed, with a cumulative external financing envelope of $148.8 billion in the baseline scenario and $162.9 billion in the downside scenario, over the 4-year program period," IMF Managing Director Kristalina Georgieva said. "The enactment of the tobacco excise tax law is welcomed, as it supports the authorities’ commitment to implementing the National Revenue Strategy. Accelerated implementation of this strategy, including modernization of the tax and customs services, reduction in tax evasion, and harmonization of legislation with EU standards, is required to meet high-priority spending needs. This, combined with improvements in public investment management frameworks, medium-term budget preparation, and fiscal risk management, will support growth, investment, and fiscal sustainability," she noted.

The authorities in Kiev "continue working to complete their debt restructuring strategy" and they are currently "focused on reaching agreement with the remaining holders of external commercial claims, including GDP warrants," Georgieva added. "Reaching agreement consistent with the program’s debt sustainability objectives is essential to reduce fiscal risks and create space for critical spending," she stressed.

"Sustained progress in anticorruption and governance reforms is needed. Additional efforts are required, including appointment of the new head of the Economic Security Bureau, completing the audit of the National Anti-Corruption Bureau, strengthening AML/CFT frameworks, and amending the criminal procedure code," IMF Managing Director was quoted as saying. / Mehr