The program will be divided into two phases. In the first, lasting 12-18 months, Ukraine will take measures to “strengthen fiscal, external, price and financial stability”, including ending monetary financing.
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The second phase will turn to more comprehensive reforms to strengthen macroeconomic stability and support the country’s recovery and reconstruction in line with Ukraine’s goal of joining the European Union. During this period, Ukraine “will be expected to return to pre-war policy framework including a flexible exchange rate and inflation targeting regime,” the IMF said.
The IMF staff forecast for Ukraine’s economy ranges from 3% contraction to 1% expansion this year, after a 30% decline in 2022.
‘serious damage’
Gavin Gray, who led the IMF’s mission, said in a statement: “A gradual economic recovery is expected in the coming quarters as activity recovers from severe damage to critical infrastructure, although headwinds remain, including in the conflict.” And the risk of escalation is also involved.” statement.
The unprecedented agreement required the IMF to change its policies. The Russian invasion that began a year earlier devastated Ukraine’s export economy and infrastructure, killed thousands and driven more than a third of its pre-war population of 40 million from their homes.
The financing arrangement is an upgrade, in that previous IMF funds were disbursed through rapid financing instruments that did not include conditions. Kiev began talks with the lender on a full loan program in June, concluding a four-month non-cash deal at an intermediary stage in December.
Ukraine’s Prime Minister Denis Shmyhal said on his Telegram-channel, “In the face of a record budget deficit, this program will help us meet all critical spending, maintain micro-financial stability and enhance our cooperation with other international partners.” Will do.”
