IMF approves $890 mln second EFF tranche for Ukraine

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IMF approves $890 mln second EFF tranche for Ukraine

MOSCOW. June 30 (Interfax) - The International Monetary Fund Executive Board has completed the first review of the Extended Fund Facility program for Ukraine and approved the immediate allocation of the second tranche of SDR 663.9 million or about $890 million, which will be used to support the budget, Ukrainian media reported, quoting a press release posted on the IMF website.

"The [Ukrainian] authorities have made strong progress toward their commitments under the EFF under challenging conditions, meeting all applicable quantitative performance criteria through end-April and structural benchmarks through end-June," the IMF said.

But certain measures are needed to ensure macroeconomic and financial stability in the challenging period ahead, it said.

"This includes maintaining a strong tax revenue base [...], supporting steady disinflation and exchange rate stability, supporting banking sector health, and advancing crucial governance and anti-corruption reforms, including with respect to asset declarations, AML/CFT and the Specialized Anti-Corruption Prosecutor's Office (SAPO)," the IMF said.

It is also vital that external financing for budget support and reconstruction projects continues on appropriately concessional terms consistent with fiscal and debt sustainability, it said.

As for monetary and exchange rate policy, the IMF said that once conditions permit, the program would support a transition toward a more flexible exchange rate, further easing FX controls, and return to an inflation targeting framework. No timeframe was given.

The IMF and the Ukrainian authorities on May 30 reached a staff-level agreement on an updated set of economic and financial policies as part of the first review of the four-year, $15.6 billion EFF with Ukraine.

The IMF approved the EFF on March 31. After the disbursement of the first tranche worth $2.7 billion, the program's schedule envisions providing three more tranches SDR 664 million each, in mid-June and October of this year and in late February 2024.