The International Monetary Fund (IMF) announced that it has achieved a staff-level agreement (SLA) with Ukraiinian authorities on a revised set of economic and financial policies for the second review of the 4-year Extended Fund Facility (EFF) Arrangement. The SLA is now pending approval by the IMF Executive Board, marking a crucial step in Ukraine's economic program, according to a press release by IMF.
The IMF stated that the Ukrainian economy is demonstrating resilience. The recent developments point towards a strong recovery in 2023 and continued, albeit softer, growth in 2024. Despite this positive trend, uncertainty remains due to persistent high war-related uncertainties. The successful fulfillment of quantitative performance criteria for end-June and indicative targets for end-Sept., along with most met structural benchmarks, positions the IMF Executive Board to consider approving around US$900 million disbursement (SDR 663.9 million), said IMF in their press release.
"An extremely challenging environment for public finances persists: the fiscal deficit remains very high, reflecting the economic and social cost of the war, entailing large financing needs. To help meet these spending needs while preserving debt sustainability, key priorities include enacting the law to fully restore tax audits and launching the National Revenue Strategy (NRS) in Dec. as planned. The authorities need to stand ready to take additional revenue measures and should continue their efforts to mobilize financing from the domestic bond market. Timely disbursement of committed external support will be critical for budget financing and macroeconomic stability," said Mr. Gavin Gray, according to an IMF press release.
During the 2023 Article IV consultation discussions between IMF staff and Ukrainian authorities focused on medium-term policies to establish a foundation for resilient and sustainable recovery aligning with Ukraine's trajectory toward European Union (EU) accession, said an IMF press release.