Government of Ukraine expands cooperation with the IMF: Ukraine Capacity Development Fund launched with a target budget of USD 65 million

On February 13, the IMF’s Ukraine Capacity Development Fund (UCDF) was launched. The official announcement was made during the inaugural meeting of the UCDF Steering Committee in Kyiv. 

Minister of Finance of Ukraine Sergii Marchenko and Governor of the National Bank of Ukraine Andriy Pyshnyy delivered speeches at the opening of the meeting. The meeting was also attended by the First Deputy Minister of Finance of Ukraine Denys Uliutin. 

The International Monetary Fund was represented by Deputy Director of the IMF European Department Uma Ramakrishnan, IMF Mission Chief for Ukraine Gavin Gray and other IMF staff.

Ukrainian authorities, development partners, and IMF staff discussed priority steps to strengthen Ukraine's capacity under the new Fund. 

Also, the parties approved UCDF work plan. The key areas of the Trust Fund are economic and financial reforms, which are consistent with the measures under the IMF's Extended Fund Facility (EFF) program. In particular, fiscal reforms, monetary policy, strengthening financial integrity, fighting corruption, and technical assistance on macroeconomic issues.

Sergii Marchenko emphasized the importance of strengthening the institutional capacity of the Government of Ukraine. He also thanked the donors of the Ukraine Capacity Building Fund for their contributions that will ensure the provision of technical assistance.

"We are grateful to the Governments of Japan, the Netherlands, Slovakia, Latvia, Lithuania and Ireland for their support of the Fund. We feel your powerful assistance both at the beginning of the full-scale invasion and now. The assistance of donor countries is a signal that we are on the right track," the Minister of Finance of Ukraine said. 

In the medium term, the targeted budget of the Ukraine Capacity Building Fund of USD 65 million will support reforms aimed at ensuring macroeconomic and financial stability, post-war reconstruction and EU integration. As of today, donor contributions amount to USD 16.5 million. 

First Deputy Minister of Finance Denys Uliutin noted the effective cooperation of the Ministry of Finance with IMF staff, in particular in the area of public finance management to strengthen the budget base and manage fiscal risks. 

"The support should reflect the goals of the Extended Fund Facility program to strengthen public policies and implement comprehensive reforms on the way to Ukraine's accession to the EU," Denys Uliutin said during the meeting. 

He also noted that over the past few months, technical support of the IMF has been focused on the following areas: analysis of financial performance and fiscal risks of key state-owned enterprises, as well as stress testing of the financial performance under various future scenarios. This analysis was published in the report on fiscal risks of the State Budget for 2024. 

In early December 2023, a mission on medium-term budget planning was held to forecast budget indicators for the medium-term period. And last week, a mission to improve liquidity management was held to better anticipate and manage financial uncertainty, especially in the context of martial law.