The Board of Directors of the International monetary Fund (IMF) Monday completed the third review of the economic program of Ukraine in the framework of the extended financing facility (EFF), which allows to provide Ukraine with about $1 billion (734,05 million SDR).
According to a press release of the Fund, the allocation of this tranche will increase the total amount of payments extended financing facility up to 6 billion 178,26 million SDR (about $of 8.38 billion).
As noted in the press release, the IMF four-year programme for extended funding of Ukraine in the amount 12,348 billion SDR (about $17.5 billion at the time of approval of the program) was adopted on 11 March 2015 with the aim of supporting the economic program of the Ukrainian government aimed at economic recovery, external stability, strengthening public Finance, maintaining financial stability and economic growth by promoting structural and management reforms, while still protecting the most vulnerable groups of the population.
“The Ukrainian economy is showing nice signs of recovery. Growth is recovering, inflation declined, and international reserves have doubled. This progress is largely thanks to the decisive actions of the authorities, including the pursuit of sound macroeconomic policies. The recent stabilization provides a promising Foundation for further growth”, – said the first Deputy managing Director, IMF David Lipton, following the meeting of the Board of Directors of the IMF.
The Fund noted that to achieve faster and sustainable growth that would allow Ukraine to catch up with its neighbors in the region, accelerated implementation of structural reforms to improve the business environment and attracting investment.
“The beginning should be privatized and market development of agricultural lands. The fight against corruption needs to be more decisive, because even with the creation of new institutions to combat corruption, concrete results have not yet achieved,” – said in a press release of the Fund.
It is also noted that despite the significant adjustment in fiscal policy, public debt remains high.
“Intensifies the urgency of structural fiscal reforms to ensure medium-term sustainability amid pressure on raising salaries and pensions. Ukraine can no longer afford to delay comprehensive pension reform, which would include, in particular, and increasing the effective retirement age”, – noted in the Fund.
In addition, according to the IMF, sustained efforts are needed to improve revenue administration and the promotion of the reform of the public administration system of Ukraine.
“The national Bank of Ukraine (NBU) manages monetary policy during a very difficult period. The preservation of the independence of the NBU will be important, as well as the continued implementation of monetary policy that, as before, is focused on curbing inflation and restore international reserves under a regime of flexible exchange rate. It will also create preconditions for the gradual weakening of administrative measures, which remained”, – is told in the message of the Foundation.
The IMF also noted the great progress made in restoring the banking system of Ukraine, but insist on the need to continue “efforts to restore stability of banks and strengthening their ability to support growth.”
“The recent nationalization of Ukraine’s largest Bank was an important step to ensure financial stability, but now it needs to be supported by efforts to ensure repayment of loans to minimise costs for taxpayers. Recapitalization of other banks and a decline in lending to related parties must be completed”, – emphasize in the Fund.
The IMF note that needs to continue efforts aimed at the solution of problems of external debt.