IMF Greenlights $2.2 Billion for Ukraine Amid Economic Challenges

The International Monetary Fund (IMF) has approved the disbursement of $2.2 billion to Ukraine under its Extended Fund Facility (EFF) program. This decision follows the completion of the fourth review of Ukraine’s EFF program by the IMF Board of Directors. The funds are intended to support Ukraine’s budget amidst ongoing economic challenges.

Despite the complex conditions, Ukraine has maintained strong performance under the EFF program. All performance criteria as of the end of March were met, with all structural benchmarks completed either on time or with minor delays.

The Ukrainian economy continues to display resilience, although uncertainties persist. Sustained reform efforts and timely external support are deemed crucial for maintaining macroeconomic stability, restoring fiscal and debt sustainability, and advancing institutional reforms necessary for EU integration.

With this tranche of $2.2 billion, the total disbursements under the program will reach approximately $7.6 billion. The EFF program for Ukraine, approved on March 31, 2023, spans 48 months with access to Special Drawing Rights equivalent to $15.6 billion.

The IMF noted the ongoing socio-economic impact of Russia’s invasion of Ukraine. Ukraine’s macroeconomic and financial stability has been maintained due to effective policies and significant external support. However, economic recovery may slow, especially given recent attacks on Ukraine’s energy infrastructure and heightened uncertainty risks stemming from the ongoing war.

Looking forward, fiscal policy for the remainder of 2024 and budget preparations for 2025 should focus on revenue mobilization efforts aligned with the National Revenue Strategy. Measures that erode the tax base should be avoided, while tax and customs administration should be strengthened in coordination with the State Fiscal Service. Additionally, improving medium-term budgeting, managing fiscal risks transparently, and enhancing governance of state investments are crucial for achieving these goals.