The Ukrainian authorities and International Monetary Fund (IMF) staff have reached a staff-level agreement to approve a four-year, $15.6 billion Extended Fund Facility for Ukraine, the International Monetary Fund's website reports.
“The Ukrainian authorities and IMF staff have reached a staff-level agreement on a set of macroeconomic and financial policies that would be supported by a new 48-month Extended Fund Facility (EFF) Arrangement,” the message reads.
The funds should be used to maintain fiscal, external, price and financial stability in our country, as well as to support a gradual economic recovery.
This agreement is subject to approval by the IMF Executive Board and is expected to be considered in the coming weeks.
“The agreement reflects the IMF’s continued commitment to support Ukraine and is expected to help mobilize large-scale concessional financing from Ukraine’s international donors and partners,” the Fund noted.
The agreement will be implemented in two phases. The first one will last from a year to 12 months and envisages an increase in budget revenues, the elimination of emission financing, the provision of net positive financing from the domestic debt market, and the maintenance of long-term stability, in particular by preparing a deeper assessment of the banking sector and supporting the independence of the National Bank of Ukraine.
At the same time, Ukraine should refrain from decisions that could reduce tax burdens. The state should also continue its governance and anti-corruption reforms.
The second phase would shift focus to more expansive reforms to entrench macroeconomic stability, support recovery and reconstruction, and strengthen economic growth, in particular through EU membership. At this stage, which is to to begin in 12-18 months, the NBU is expected to return to its pre-war monetary policy with a floating exchange rate and inflation targeting regime.
The government should implement the National Revenue Strategy, increase competition in the energy market, and reduce quasi-fiscal liabilities.
According to the Ukrainian Ministry of Finance, since Russia launched its full-scale invasion, Ukraine has received more than $38 billion in budget support from foreign countries and international financial institutions.