IMF Board of Directors approves 1st revision of Extended Fund Facility and allocation of USD 886 million tranche

On June 29, 2023, the Board of Executive Directors of the International Monetary Fund (IMF) approved the first revision of the Extended Fund Facility (EFF) program and the allocation to Ukraine of the second tranche in the amount of 663.9 million special drawing rights (SDR), which is about USD 886 million.

This is stated in the message of the NBU, Ukrainian News Agency reports.

The corresponding funds will be directed to support the state budget of Ukraine.

In addition, they will support international reserves, which will strengthen the ability of the National Bank to ensure the stability of the currency market.

The management of the IMF agreed that the effective policies of the Ukrainian authorities and stable external support helped to ensure macroeconomic and financial stability in the conditions of a full-scale war.

The Ukrainian economy is showing greater resilience than predicted.

Inflation is rapidly decreasing, and the size of international reserves is increasing.

Taking this into account, the International Monetary Fund improved the growth forecast of the Ukrainian economy this year to the range of 1-3%.

Ukraine's progress in fulfilling its obligations under the EFF under the difficult conditions of a full-scale war was separately noted.

Ukraine completed all structural beacons for the period until the end of June.

In addition, all quantitative performance criteria for the program were met: both ongoing and with a defined deadline of the end of April 2023.

The IMF management also noted the determination of the Ukrainian authorities to strictly adhere to the terms of the EFF program, stressing that consistent responsibility and maintaining the pace of reforms in the difficult period ahead are important for maintaining macroeconomic and financial stability.

The International Monetary Fund welcomes all the important steps Ukraine is taking to strengthen fiscal, external, price and financial stability.

In particular, the National Bank, as planned, began assessing the state of the banking sector, and also approved the Strategy for easing currency restrictions, moving to a flexible exchange rate in the future and returning to inflation targeting, which will be implemented under favorable conditions.

The preparation of this strategy was a structural beacon with a deadline of the end of June 2023.

In addition, Ukraine supports the high pace of implementation of structural reforms in terms of:

- fight against corruption and money laundering;

- state administration, state finance and investment management;

- implementation of risk-oriented supervision in the financial sector.

As Ukrainian News Agency earlier reported, the decision of the IMF Board of Directors regarding the first review of the program was preceded by a Staff-Level Agreement (SLA), reached on May 30, 2023.

On March 31, 2023, the Board of Executive Directors of the International Monetary Fund approved the four-year Extended Fund Facility program for Ukraine in the amount of 11.6 billion SDRs (equivalent to about USD 15.6 billion).

This decision of the Board of Executive Directors of the IMF also provided for the immediate allocation of the first tranche to Ukraine in the amount of SDR 2 billion (USD 2.7 billion).

This program is part of the overall package of support to Ukraine by international partners in the amount of USD 115 billion.

Given the extremely high level of uncertainty caused by Russia's war against Ukraine, the EFF program will be implemented in two phases.