Ukraine to save $130 mln per year due to IMF fees cut - Ukrainian rep

MOSCOW. Oct 14 (Interfax) - Ukraine's total annual expenses for using International Monetary Fund (IMF) resources will decrease by $130 million following the fund's decision to reduce its charges, Ukraine's Executive Director at the IMF Vladislav Rashkovan said.

"The IMF Board of Directors has decided to reduce its fees (charges, surcharges and commitment fees) that affect the cost of resources for developing countries with IMF financing programs. On average, the fees will drop by 36%, which will reduce the IMF's annual revenue by $1.2 billion a year," Ukrainian media outlets quoted Rashkovan as saying in a statement on social media.

In addition, this decision positively impacts Ukraine, as its annual expenses for using the IMF's resources will decline by around $130 million, he said. Bearing in mind the IMF's future tranches under the current program, the effect over the next five years will be $650 million-$700 million.

"It's not bad, especially as these costs for Ukraine will drop by 38-39%, i.e. by a larger amount than for other countries," he said.

However, these charges and surcharges have been reduced only for emerging economies, because the cost of resources for the poorest countries is formed using a different procedure, Rashkovan said.

It was a difficult decision to take for a number of reasons, including the fact that the IMF is a consensus-driven organization, and the fees issue exposed a difference between the interests of two core groups of the IMF's member states, i.e. donors and debtors, he said.

"As major economies (and their Central Banks) tackled inflation, the Central Banks launched the cycle of lowering key interest rates, so the base lending rate will shortly start to drop from the peaks of the past year. This will cut the cost of IMF resources for Ukraine even further," Rashkovan said.

According to information on the IMF website, the IMF approved a new policy on October 11, reducing basic charges on SDR interest rate by 60 basis points previously 100, raising the threshold for level-based surcharges by 300% at quota, lowering the rate for time-based surcharges by 75 basis points, and increasing the thresholds for commitment fees by 200% and 600% of quota from 115% and 575% respectively.

The expected number of countries subject to surcharges in fiscal year 2026 will fall from 20 to 13.

The new policy is due to take effect on November 1, 2024.