IMF approves monitoring program for Ukraine
MOSCOW. Dec 20 (Interfax) - The executive board of the International Monetary Fund (IMF) said after discussing the approval of Program Monitoring with Board Involvement (PMB) for Ukraine on Monday that the PMB will help the country maintain stability and catalyze donor financing and could pave the way to a possible full-fledged IMF-supported program.
IMF management has approved the Ukrainian authorities' request for the PMB, IMF First Deputy Managing Director Gita Gopinath was reported as saying in a press release on the fund's website.
"The PMB is tailored to Ukraine's exceptional circumstances, to help the authorities implement prudent macroeconomic policies during this particularly difficult period and catalyze donor financing. Large and predictable external financial support will be critical for the success of the authorities' strategy, and frontloaded disbursements would help address strains in early 2023," Gopinath said at the conclusion of the board's discussion.
Key measures under the PMB include enhancing revenue mobilization and reviving the domestic debt market, preparing a financial sector strategy, and enhancing transparency and governance, the IMF said.
"The PMB focuses on a targeted set of policy actions to support macroeconomic and financial stability. This will require enhancing revenue mobilization, containing monetary financing and therefore reviving domestic debt markets. At the same time, the PMB seeks to promote transparency and preserve hard-won gains from past Fund-supported programs, including in the areas of independence of the National Bank of Ukraine and, more broadly, governance and anti-corruption," Gopinath said.
"Strong implementation of the PMB should help pave the way toward a possible full-fledged IMF-supported program," she said.
"Considering the existence of the macroeconomic framework approved by the IMF, Ukraine hopes that the approval of the program will provide our partners with confidence and optimal conditions to ensure sufficiently rhythmical financial inflows amid high needs of the balance of payments and the state budget," the government of the National Bank of Ukraine (NBU), Andriy Pyshnyy said in a statement on the central bank's website.
"The NBU is prepared to fulfil all the commitments undertaken under this program," he added.
In the course of updating the financial sector's strategy, the NBU together with IMF staff will develop the principles of conducting asset quality reviews and stress tests of banks, which is one of the structural benchmarks of the PMB for Ukraine, the NBU said.
The program envisages a set of measures to contain monetary financing of the budget deficit next year, the NBU said.
Ukraine requested the four-month PMB. Kyiv hopes that this program, which does not provide for financial assistance, will, after one or two reviews, help transition to a standard extended fund facility (EFF) early next year that will help the country to partly cover the state budget deficit in 2023, estimated at $38 billion, and support the balance of payments.
The IMF's mission chief in Ukraine, Gavin Gray announced on November 23 that Ukraine had reached a Staff-Level Agreement (SLA) on the terms of the PMB.
The PMB lays out the authorities' political intentions to support macroeconomic and financial stability and estimates the needs for external financing. The PMB will help provide an anchor for macroeconomic policy and intensify donor support, Gray said upon the conclusion of the mission's work from November 11 to 22.