Ukraine hopes for full-fledged program with IMF to cover $10 bln of budget deficit in 2023

MOSCOW. Feb 21 (Interfax) - A total of $10 billion in additional external funding is currently needed to cover Ukraine's budget deficit in 2023, and the launch of a full-fledged long-term program backed by the International Monetary Fund (IMF) will help reduce this deficit and support Ukraine's macroeconomic and financial stability, Ukrainian Finance Minister Sergei Marchenko said at a meeting with IMF Managing Director Kristalina Georgieva in Kiev on Monday.

"Last week, during the IMF mission, we reached a staff-level agreement on reviewing the program monitoring with board involvement. In this context, we look forward to starting discussions on a full-fledged program with the IMF's support to ensure the financing of priority budget spending in 2023, including humanitarian and social expenditures," Ukrainian media quoted Marchenko as saying in a statement circulated by the Finance Ministry's press service.

Apart from directly drawing funds from the IMF, this program will help mobilize support from other donors, Marchenko said.

The parties discussed the results of the IMF's mission to review the monitoring program with board involvement, which took place in Warsaw on February 13-17, and the prospects for creating a new full-fledged cooperation program with the IMF's support, Ukrainian media said.

Marchenko also thanked Georgieva for the prompt financial assistance the IMF provided since the start of the crisis and for the support in implementing key measures and policies in the fiscal and financial sectors.

"The government of Ukraine highly appreciates the IMF's support and its contribution to the country's economic development for many years. In times of crisis, the partnership with the fund helps maintain financial stability and systematically implement the necessary reforms and policies," Marchenko said.

On February 18, Georgieva said in an interview with CNBC International on the sidelines of the Munich Security Conference that the parties would be moving at a very rapid pace in their talks on a new full-fledged program.

"We are not talking about a long period of time. Why? Because the foundation is built through these four months of intensive engagement [as part of the Monitoring Program]. Speed is the essence. We will be coming to the conclusion [of the program] not too far into the future. I cannot say any more today. We talk about a number of weeks, not a very long period of time," she said.

Georgieva also said she is very pleased with the results of these four months of intensive interaction with the Ukrainian authorities that helped complete the review of the monitoring program with board involvement with very high marks.

"What we have addressed are issues of great importance for Ukraine in the fiscal policy, governance, anti-corruption, and for the performance of the financial sector. This excellent outcome paves the way for the fund to work towards a full-fledged program with Ukraine. And I can say responsibly that Ukraine does need the IMF at this critical time," she said.

Ukraine's financial needs are significant, Georgieva said. "We put them somewhere between $40 billion and $48 billion for this year," she said.

The IMF sees prospects of resuming growth in Ukraine in 2023, after its GDP contracted by 30% in 2022, Georgieva said, adding that this is the result of the very serious work accomplished by the National Bank of Ukraine and the Finance Ministry.