REUTERS
A new Stand-By Arrangement will provide an anchor for the authorities' economic policies during the coming year.
The International Monetary Fund (IMF) has announced its Executive Board on December 18 approved a 14-month US$3.9 billion Stand-By Arrangement (SBA) for Ukraine, with US$1.4 billion for immediate disbursement.
"The Board also took note of Ukraine's decision to cancel the arrangement under the Extended Fund Facility for Ukraine that was approved on March 11, 2015," the IMF said in a statement.
The authorities' economic program supported by the SBA will build on the progress made under the Extended Fund Facility (EFF) arrangement. The SBA will provide an anchor for the authorities' economic policies during 2019 and focus on maintaining macro-economic and financial stability. The program will focus on four priorities: (i) continuing the ongoing fiscal consolidation to keep public debt on a downward path; (ii) further reducing inflation, while maintaining a flexible exchange rate regime; (iii) strengthening the financial sector, promoting asset recovery, and reviving bank lending; and (iv) advancing a focused set of structural reforms, particularly to improve tax administration, privatization and governance.
"The approval of the SBA enables the immediate disbursement of SDR 1 billion (about US$1.4 billion). The remainder will be available upon completion of semi-annual reviews," the IMF said.
"The Ukrainian authorities have successfully restored macro-economic stability and growth, with support from the international community. Prudent fiscal and monetary policies and a flexible exchange rate regime have helped reduce fiscal and current account deficits. Reserves have been partly rebuilt and confidence has improved," IMF First Deputy Managing Director and Acting Chair David Lipton said following the Executive Board's discussion.
"A new Stand-By Arrangement will provide an anchor for the authorities' economic policies during the coming year, preserving recent economic gains and paving the way for higher sustainable growth. Together with support from the World Bank and the European Union, the arrangement will help Ukraine meet its financing needs," he said.
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The authorities' program focuses on maintaining macro-economic stability, notably through continued fiscal consolidation and inflation reduction. "This will be accompanied by targeted reforms to strengthen tax administration, governance, and the financial and energy sectors, while continuing to provide social assistance for the most vulnerable," he said.
"The authorities remain committed to fiscal discipline to place public debt firmly on a downward path. It will be important to resist pressures to increase spending or lower taxes, while renewing efforts to improve public financial management and revenue administration. Monetary policy aims to reduce inflation and rebuild international reserves within a flexible exchange rate regime. Safeguarding central bank independence will be crucial in this regard. Efforts are underway to address nonperforming loans, recover assets from failed banks, and improve governance in state-owned banks," he added.
As UNIAN reported earlier, the IMF preliminarily agreed the new, 14-month SBA worth US$3.9 billion late in October 2018.
In late November, the IMF officially confirmed the absence of legal restrictions on further cooperation with Ukraine after the imposition of martial law in the country until the end of December 2018.