2 Mar 2023 13:52

Ukraine Finance Ministry expecting IMF mission to start work on new program March 8

MOSCOW. March 2 (Interfax) - An International Monetary Fund mission will be working in Warsaw from March 8-15, discussing parameters for a potential future program with representatives from Ukraine, Ukrainian media reported, quoted a statement by Ukrainian Finance Minister Sergei Marchenko.

"There we will agree on the conditions, and the content, and volumes, and so on. It is still too early to talk about specific details, because there are many issues of the Fund's internal discussion," he said. His speech was broadcast on YouTube.

There are some "specific contradictions" within the IMF Board of Directors, as not all countries support Ukraine, Marchenko said.

"Therefore, in order for us to receive full consensus and support, we need to work a little, including within this organization," he said.

The Ukrainian side is actively working on this, he said. At this point, discussions are ongoing about a four-year program, the task of which is to adjust the policy so that Ukraine, which currently spends 50% of its budget on military requirements, and finances the other 50% with the help of partners, reaches a level of "more or less" self-sufficiency at the end of the military operation, the minister said.

"I think we will find the necessary solutions so that, starting in April, we have a fully-fledged program with the Fund," Marchenko said.

"The Fund has yet to put forward unbearable conditions that we cannot meet. We are talking about programmatic, basic things: ensuring monetary and fiscal stability, reducing the level of the budget deficit and ensuring an acceptable level of burden on the budget, as well as good public administration and ensuring best corporate practices. And we are discussing anti-corruption programs, which have traditionally been part of IMF programs," the finance minister said.

It is necessary to understand Ukraine's economic prospects, and how to overcome existing economic realities, so some measures might be quite tough, he said.

"I hope that the future program will reflect the possibility of reformatting the existing tax system, to make it attractive for developing investments and attracting businesses. Moreover, in terms of tax administration, the measures might be quite serious, because there are many problems and a lot of complaints about it," the minister said.

The details of the future program will be discussed during the mission, Marchenko said.

"So far, there are no critical warnings that we cannot remove or discuss. That is, we are moving on a tight schedule, but there is an understanding that the ultimate goal must be achieved and we will have a program," the minister said.

The implementation of the IMF program is possible only if the G7 countries continue to provide financial support to Ukraine, since the Fund's financial resources are not sufficient to cover all needs.

Ukrainian leaders expect that the volume of the new program will exceed $15 billion, it was reported.

Kiev and the IMF are currently carrying out a four-month Program Monitoring with Board involvement, or PMB, which the Fund approved on December 2022. An IMF mission conducted a first review of the PMB from February 13-17. Following this, a preliminary agreement was reached that paves the way for discussion of a fully-fledged program with the IMF.

Kiev hopes that the PMB will be replaced by an Extended Fund Facility, or EFF, as early as at the beginning of Q2 2023, which could partially bridge the gap in covering the $38 billion 2023 budget deficit. The gap right now is approximately $5 billion, Ukrainian Prime Minister Denis Shmygal has said.