IMF mission starts second review of Ukraine's compliance with EFF program
MOSCOW. Nov 7 (Interfax) - An International Monetary Fund (IMF) mission began work in Ukraine on Monday for Article IV consultations and a second review of the country's implementation of an Extended Fund Facility (EFF) program.
The mission will work both online and offline, Ukrainian media reported, citing the National Bank of Ukraine (NBU).
The second review will include discussions on Ukraine's progress in fulfilling its obligations under a memorandum on economic and financial policy, specifically in the area of fiscal, monetary and currency policy, ensuring financial stability and structural reforms for medium- and long-term economic growth.
Meetings will focus on the situation in Ukraine's financial sector, the results of an assessment of the banking sector's stability, implementation of the strategy to ease currency restrictions, the transition to a more flexible exchange rate and the return to inflation targeting, the report said. The mission will also discuss the results of the transition to a managed flexibility policy for the exchange rate and the introduction of risk-oriented oversight in the financial sector.
"We are committed to a constructive analysis of the completed work and fruitful discussion on further steps. The review will not be easy [...] We fully realize the critical necessity of maintaining IMF support, not only for further financing of budget needs, but also for our country's development in general," NBU governor Andrei Pyshny was reported as saying.
IMF Managing Director Kristalina Georgieva said in mid-October that the preliminary results of mission work on preparing the second review of the EFF program showed that Ukraine's economy is recovering faster than initially expected and growth this year will probably be at the upper end of the IMF forecast, 3%.
She also noted the continuation of structural reforms and the NBU's transition from a fixed exchange rate policy to managed flexibility of the rate.
The four-year EFF for Ukraine was approved on March 31, 2023 and the first tranche of $2.7 billion was released in early April. The program calls for the release of another three tranches of 664 billion SDR (about $914 million at current exchange rate) after IMF missions assess Ukraine's fulfilment of obligations as of the end of April, June and December. The country received the second tranche in July.
Given a positive conclusion from mission experts, a decision on releasing the third tranche is expected to be made in the second half of October or in November. However, Ukraine has still not met all the structural benchmarks of the program needed for the second review on its fulfillment.