The International Monetary Fund and the Ukrainian government reached a staff-level agreement on the first review of the Standby Agreement and allocating a tranche of nearly $ 700 million to Ukraine.
This is according to an official statement from the IMF, published Monday evening, reports Ukrinform.
“The IMF team and the Ukrainian authorities have reached a staff level agreement on policies to support the country’s reforms in the context of the Standby Arrangement (SBA),” the statement said.
The press service notes that this decision paves the way for the consideration of the first review of the stand-by arrangement (SBA) and the request for an extension of the program by the IMF’s executive board.
“Completion of the first review would allow the disbursement of SDR 500 million (about US $ 700 million),” the statement said.
The agreement covers “an updated set of economic, financial and structural policies to help address the economic and health crisis caused by COVID-19, while maintaining macroeconomic and financial stability, reducing vulnerabilities and improving health ‘tackling the main obstacles to private investment’.
The program focuses on five main directions.
First, it involves reducing fiscal policies to parameters consistent with medium-term debt sustainability while protecting socially vulnerable people, strengthening revenue administration and reducing fiscal risks. Second, it is about preserving the independence of the central bank and focusing monetary policy on returning inflation to its target.
Third, it is about ensuring the financial health of banks, in particular through good governance, with the aim of reviving healthy bank loans to the private sector;
Fourth, it is about fighting corruption and advancing the implementation of judicial reform.
And fifth, it is about reducing the role of the state and special interests in the economy to improve the business environment, strengthen corporate governance, attract investment and increase the potential of the economy.
“The agreement as well as the authorities’ request for an extension of the program until the end of June 2022 are subject to the approval of the management of the Fund and the Executive Board of the IMF. The continued and resolute implementation of strong policies in these areas, in line with program objectives and agreed commitments, will pave the way for the IMF Executive Board’s review of the review, scheduled for November, ”he added. said the IMF.
In turn, President Volodymyr Zelensky expects the IMF Executive Board to approve the staff-level agreement on the $ 700 million allocation to Ukraine in November.
“Ukraine and the IMF have reached an agreement at the staff level to complete the first review of the Standby Agreement. I expect the IMF Executive Board to approve this deal in November. This will allow Ukraine to receive around 700 million dollars and once again confirm our close cooperation ”, Zelensky tweeted.
Ukraine’s 18-month SBA with access to SDR 3.6 billion (equivalent to US $ 5 billion) was approved on June 9, 2020, to provide balance of payments and budget support to ” help the authorities cope with the effects of the COVID-19 shock, while consolidating the gains and advancing important structural reforms to reduce the main vulnerabilities. The first aid package worth $ 2.1 billion was immediately allocated under the SBA.