The IMF Team and Ukrainian authorities Reached Staff Level Agreement on Program Monitoring with Board Involvement

Experts of the IMF and representatives of the Ministry of Finance of Ukraine, the National Bank of Ukraine and other authorities reached a staff-level agreement on economic policies for a Program Monitoring with Fund Board (PMB) Involvement. The parties discussed the key elements of the Program during the consultations on November 11-22.

"I am grateful to the IMF experts for the productive discussions which helped us to agree on the further economic policy of Ukraine aimed at preserving the overall sustainability in the conditions of a full-scale war. We look forward to continuing our deep cooperation in the near future", Minister of Finance of Ukraine Sergii Marchenko said.

The Ukrainian authorities have requested a four-month Program Monitoring with Board Involvement to outline the directions of the fiscal  and monetary policies of the Government of Ukraine and the National Bank of Ukraine aimed at support of macroeconomic and financial stability and pave the way toward a fully-fledged Fund program.

The PMB includes policies and measures to: 

• boost tax revenues and revive the domestic debt market; 
• contribute to the long-term stability of the financial sector; 
• contain monetary financing; 
• enhance governance and transparency.

The parties agreed that in the conditions of war Ukraine will continue to to require significant external financing to preserve economic stability. Also, it will  require concerted efforts to mobilize domestic financing against a backdrop of ample liquidity.

At the same time, the Ukrainian authorities intend to take measures to boost tax revenues including restoring pre-war tax administration practices. New measures that might erode tax revenues will be avoided.

Monetary policy will include liquidity management and balancing of the FX market safeguarding price and exchange rate stability while maintaining adequate international reserves.  The National Bank strategy in the financial sector will also be updated and expanded to cover targeted diagnostics of banks, assessment of capital needs and non-performing assets resolution frameworks.

In addition, economic policy for the Program will be aimed at cementing good corporate governance practices in state-owned enterprises and banks, as well as preserving an independent and effective functioning of anti-corruption institutions. 

The agreement on economic policy for the Program Monitoring with Fund Boards is subject to approval by the International Monetary Fund Management.