10 Oct 2023 14:51

IMF mission to conduct second review of Ukraine EFF program in Nov - NBU head

MOSCOW. Oct 10 (Interfax) - The International Monetary Fund's (IMF) mission for the second review of the Extended Fund Facility (EFF) for Ukraine is scheduled to take place in the first half of November, National Bank of Ukraine (NBU) Governor Andrei Pyshny said.

"Afterwards, about one month later, there will be [a meeting of] the IMF Board. Access to financing will be opened immediately after a positive decision is adopted. If everything happens as we plan, Ukraine will receive a total of $4.5 billion from the IMF this year. In all, the program envisages 11 reviews," Ukrainian media quoted Pyshny as saying in an interview with Forbes Ukraine.

Ukraine "is not in ideal but in fairly good shape" as regards the implementation of the structural benchmarks, he said.

"Issues concerning tax audits, PEP and amending this year's budget to finance defense needs by 317 billion hryvni are problematic and need to be discussed. So are next year's budget and anti-corruption issues," he said.

At the same time, Pyshny said he is optimistic that the PEP financial monitoring issue will be resolved.

"I see the political freedom of the country's top leadership to implement this structural benchmark. As regards other issues, I strongly hope that the parliament will adopt all necessary decisions. At least, the NBU has done everything necessary for that," he said.

The NBU's independence and institutional capacity is not on the list of Ukraine's problems for the first time over quite a lengthy period, Pyshny said.

IMF Mission Chief for Ukraine Gavin Gray said in an interview with NV on Monday that for the second review of the EFF program, Ukraine needs to adopt a new charter for its Gas Transmission System Operator and resolve the issue of tax audits of businesses and PEP financial monitoring at the legislative level to ensure that the law is fully consistent with the FATF guidelines and the risk-oriented approach is implemented, Pyshny said.

Other key tasks include drafting a concept note on the 5-7-9% Affordable Loan low-interest lending program that will offer a vision for improving its monitoring and averting negative consequences for the financial sector as a result of its implementation, he said.

An important issue is that changes that will be made to the legislation on the Specialized Anti-Corruption Prosecutor's Office, giving it more institutional autonomy, Gray said.

The final version of the 2024 draft budget, which has already been submitted to parliament, should match all the goals set by Ukraine as part of the program, including the goal of achieving debt sustainability and feasibility, he said.

Considerable progress has been made, but there is still important work that needs to be done, Gray said following the IMF's two-week mission and the visit by the fund's delegation to Kiev last week.

Ukraine also plans to launch the so-called National Revenue Strategy before the end of 2023 as part of the EFF program, Gray said, adding it is clear that international support will gradually decline over time, which is why Ukraine needs to develop its own domestic resources for self-financing.

Additional fiscal measures will have to be taken if the crisis extends beyond the baseline scenario, i.e. into the second half of 2024 and beyond, he said.

In addition to external funds, the Ukrainian authorities should take political measures to balance all existing financial needs, he said.

As reported, the IMF Executive Board approved a four-year EFF on March 31, 2023. The first tranche of $2.7 billion was provided in early April. After the disbursement of the first tranche, the program's schedule envisions providing three more tranches SDR 664 million or $893 million each, in mid-June and October of this year and in late February 2024 following the first, second and third reviews, when Ukraine's fulfillment of its commitments with deadlines in late April, June and December 2023, respectively, is assessed.

If the mission's assessment is positive, a decision on transferring the third tranche of the EFF program to Ukraine may be made in the first half of December.