On December 11, 2023, the Executive Board of the International Monetary Fund (IMF) completed the 2023 Article IV consultations and approved the second revision of the Extended Fund Facility (EFF).
This follows from a statement by the NBU of Ukraine (NBU), the Ukrainian News agency reports.
The successful completion of the second revision of the program involves the immediate allocation of the third tranche by the IMF to Ukraine in the amount of about USD 900 million (663.9 million in Special Drawing Rights).
The corresponding funds will be used to finance the expenses of the State Budget of Ukraine.
They will also support international reserves, which will strengthen the NBU's ability to ensure exchange rate stability.
In addition, the successful implementation of the program preserves Ukraine's access to a package of general macroeconomic support from international partners for the four-year period of the program.
Currently, it is USD 122 billion.
Ukraine fulfilled all quantitative performance criteria at the end of June and indicative targets at the end of September.
Also, most of the structural beacons at the end of October were completed on time, and several measures for other structural beacons were completed with a certain delay.
The IMF emphasized that further sustained implementation of structural reforms, including domestic resource mobilization, combined with timely and predictable international financing, is necessary to maintain macro-financial sustainability.
At the same time, it is important to continue institutional reforms and support reconstruction efforts while promoting a "green" recovery on the way to Ukraine's accession to the European Union.
Separately, the IMF emphasized that, despite the devastating impact of the war, macroeconomic indicators turned out to be better than expected.
The Ukrainian economy demonstrates extraordinary resilience. The latest data indicate a stronger-than-expected economic recovery, a long and sharp decline in inflation, and the preservation of exchange rate stability, including after the NBU's successful transition to managed exchange rate flexibility supported by strong international reserves.
Taking this into account, the International Monetary Fund improved its forecast for real GDP growth in 2023 to 4.5%. However, at the time of the approval of the first review of the EFF program, this indicator was estimated in the range of 1% to 3%.
The IMF expects the pace of recovery to slow to 3-4% in 2024, given the continuation of full-scale war. At the same time, risks to economic growth remain significant due to the extremely high uncertainty caused by the war.
As the 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 reached on November 10, 2023.
On March 31, 2023, the Board of Executive Directors of the International Monetary Fund approved the four-year EFF program for Ukraine.
The program envisages measures to support fiscal, external, price, and financial stability and economic recovery in a period of high uncertainty, as well as to improve corporate governance and strengthen state institutions with the aim of post-war reconstruction and Ukraine's acquisition of EU membership.
The EFF program is implemented in two stages (war and post-war) and provides access to credit funds from the IMF in the amount of SDR 11.6 billion (equivalent to USD 15.6 billion). Tranches under the program are provided based on the results of quarterly reviews. The total amount of financing from the IMF that Ukraine will receive this year will increase to SDR 3.3 billion (USD 4.5 billion equivalent) thanks to the successful second review of the program.
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