The International Monetary Fund (IMF) and the economic bloc of the Ukrainian authorities have reached an agreement to revise the Monitoring Program. It will pave the way for negotiations and the conclusion of a full-fledged program with the IMF on the terms of extended or stabilization financing with exclusive access to the Fund’s resources. This is a positive development for Ukraine, as a full-fledged IMF-supported program will help the country in its efforts to join the European Union.
With all quantitative and indicative targets achieved, and all agreed structural beacons fulfilled within just two months from approval to the first and simultaneously the last review. The program includes a government package of draft laws aimed at increasing tax revenues, taking measures to eliminate budget arrears, developing approaches to reform the social protection system, establishing a supervisory board of Naftogaz, and agreeing on key elements of the banking sector diagnosis.
The IMF has outlined the directions of the joint vision of the stabilization and structural reform policies for 2023, including the timely attraction of large-scale external assistance, the activation of the domestic debt market to “eliminate dependence on emission financing,” and the creation of conditions for a gradual revision of restrictions imposed by the NBU and conducting diagnostics of banks.
The Fund has also noted progress in these areas, including the fight against corruption and the strengthening of public administration. The IMF has emphasized the need to increase expenditures, including critical, recovery, and social protection expenditures. The program will model in such a way that the latter, by ensuring macro-financial stability and progress in structural reforms, will strengthen Ukraine’s efforts to join the EU and to rebuild the country on a large scale.
This is a powerful signal from the IMF and demonstrates its confidence in the Ukrainian government’s ability to implement necessary reforms. The revision of the monitoring program will soon be approved by the IMF Board of Executive Directors, which will be an important step towards Ukraine’s economic stability and its efforts to join the European Union. Ukraine is hopeful that this agreement will help to attract foreign investment and increase economic growth.
