The international monetary Fund, the IMF is a specialized Agency of the UN that provides loans to States with balance of payments deficit.
The balance of payment deficit is a situation when the amount the country receives less currency than this country spends. If the economy is in such a situation, the state has to reduce its foreign exchange reserves, supporting the balance of payments. And because of this the devaluation of the national currency and other unpleasant for the economy of things.
IMF started its work on March 1, 1947. And the first country that took the loan from the IMF was France. Ukraine started cooperation with the IMF much later – in the summer of 1992. For 2016, the quota of Ukraine is 2011,8 billion SDRs. SDR – special drawing rights – an artificial “money” the IMF, which happen all the transactions and which, in fact, issued loans. The SDR is neither a currency, nor a debt, but in addition to the IMF their are 14 official organizations.
The stages of interaction with the IMF
- 1994-1995 year
Ukraine has received 498,7 million SDRs (763,1 million USD) under the programme “financing Mechanism of systemic change”, which was aimed at supporting post-Soviet countries. At the same time Ukraine has adopted and implemented most of the recommendations of the Fund regarding tighter fiscal policy. The results were visible almost immediately, but they were not enough to normalize the economic situation.
- 1995 to 1998
Under the three annual programmes “Stand by” Ukraine has received SDR 1.3 billion ($1.9 billion). The main purpose of these loans was a strengthening of the hryvnia, reduction of the budget deficit. However, the third program was suspended in March 1998, as the government of Ukraine has fulfilled the IMF requirements regarding the budget deficit and the maximum growth rate of the monetary base. If Ukraine has lost 54% of the agreed loan amount.
Ukraine becomes a member of “the Extended funding programme”, which provides loans of 2.6 billion dollars. But gets only SDR 1.19 billion (1.59 billion dollars). A three-year package of reforms that would ensure the implementation of the requirements of the IMF, was adopted by the government, but was not completed until the end. And the IMF found the unreliability in the reports of the national Bank of the state foreign exchange reserves in 1996-1998 year. But, despite the fact that this time payments were suspended in 2001, Ukraine has achieved the goals of the IMF. GDP growth reached 9.1 percent, the inflation rate came to a level of 6.1%, while foreign exchange reserves become short for eight weeks of imports.
- 2002-2008 year
During this period, Ukraine has not received any tranche from the IMF. Despite the fact that the IMF Board of Directors approved the program of “Precautionary stand-by” for 12 months, which was to 605 million dollars. Cooperation with the IMF was for technical support and consultations regarding macroeconomic indicators in connection with the world development forecasts. This corresponded to the position of the then President of Ukraine Viktor Yushchenko: “In the future – without debts”.
- 2008-2013 year
The global economic crisis has and so the unstable economy of Ukraine. The government is applying for participation in the new IMF program. In November 2008, the Board of Directors approves the grant tranches, the total amount which is 802 percent of the quota of Ukraine in the IMF. Under the new program “Stand by” Ukraine had to 16,5 billion dollars.
The first tranche was immediately sent to replenish the gold reserves, the second part and the third added to the budget of Ukraine. However, he remained in deficit for 2009. This was contrary to loan requirements, and payments were again interrupted.
In July 2010, the IMF has engaged Ukraine in the new program, thereby superseding all previous agreements. The new program provided for the receipt of 15.1 billion dollars for 2.5 years. This time the government has received two tranches: 1.89 and $ 1.5 billion. Most of the funds were again transferred directly to support the budget. Again, the program was interrupted because of the failure of credit conditions.
After Euromaidan and the new government, the IMF agreed on the inclusion of Ukraine in the next program “Stand by”. The new government agreed on the old loan conditions: the recovery of the banking system, a gas reform, reduction of budget expenditures. Of course, it added urgent advice to remedy the situation of corruption, improve the business climate. Also discussed land reform, the lifting of the moratorium on land sales, the rise of “communal” and retirement age.
7 may 2014 the IMF gave Ukraine $ 3 billion. September 4 held the second tranche – $ 1.3 billion. However, even in the summer, it became clear that this time to cope with all the reforms will fail due to large-scale economic crisis, unfolding against the background of Russian aggression in the East of the country. Macroeconomic indicators of credit conditions have been corrected. And already on March 11, 2015, at the request of the government, the IMF replaced the program “Stand by” for a new program of expanded financing.
In four years, Ukraine is to receive $ 17.5 billion. The first tranche was held in the same month and amounted to 5 billion dollars. The second tranche, in the amount of $ 1.7 billion, with a slight delay, but still held on 4 August. After that, the IMF took a break. The next payment took place only in September 2016 and $ 1 billion. In April 2017, the IMF transferred the same amount. It is worth noting that for the first time in cooperation with the IMF, Ukraine for the first time reached the fourth tranche.
All, from 1994 to 2017 Ukraine 35,2 billion dollars from the International monetary Fund, and returned a little over 18.
In August 2017 Ukraine had to begin to repay debts , according to the latest IMF program. And so it happened – August 4 was returned $ 450 million for the program in 2014.