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The IMF has updated the memorandum with Ukraine: there are new structural benchmarks

Kyiv • UNN

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The IMF has approved the seventh review of the EFF program for Ukraine, providing $0.4 billion. New benchmarks have been set for managing public investments, and economic growth is slowing due to the war.

The IMF has updated the memorandum with Ukraine: there are new structural benchmarks

The Memorandum on Economic and Financial Policy with the International Monetary Fund (IMF) following the results of the seventh review of the Extended Fund Facility (EFF) program with Ukraine has been updated, new structural benchmarks have been set, the National Bank of Ukraine reported on Saturday, UNN writes.

Details

The NBU indicated that the IMF Board of Directors approved the seventh review of the EFF program with Ukraine on March 28.

"Successful approval of the seventh review of the program provides immediate access to financing in the amount of SDR 0.3 billion (approximately $0.4 billion equivalent), which will be used to support the state budget. After the tranche is received, the total amount of financing received under the program will reach $10.1 billion," the regulator noted.

The IMF release notes that program performance remains strong despite challenging conditions. All quantitative performance criteria as of the end of December have been met, as have most structural benchmarks.

New structural benchmarks have been set, including measures to improve public investment management. At the same time, the timelines for individual structural benchmarks have been adjusted to reflect current circumstances.

- the NBU reported.

"Ukraine's level of compliance with the program remains high, the Memorandum on Economic and Financial Policy with the IMF has been updated, and we are already working on the tasks for the eighth review. In Washington, during the spring meetings of the IMF and the World Bank, we will continue a detailed discussion of the progress under the program with international partners to maintain sustained support for our country," said Andriy Pyshnyy, Governor of the National Bank of Ukraine.

According to the memorandum published by the IMF, 4 new structural benchmarks have been identified:

  1. Complete an independent compliance and integrity review of the NSSMC - end of June 2025.
    1. Review the processes for selecting and appointing members of the supervisory board of state-owned enterprises and adopt relevant amendments to the relevant statutes of the Cabinet of Ministers of Ukraine (CMU) in accordance with paragraph 3 of ¶71 of the Memorandum on Economic and Financial Policy (MEFP) - end of August 2025.
      1. The Ministry of Finance, together with the State Tax Service and the State Customs Service of Ukraine, to develop an operational plan for the implementation of the updated IT strategy, which will be adopted to support the digital transformation required for the digital transformation of the National Revenue Strategy (NRS) - end of September 2025.
        1. Adopt sectoral strategies in line with the new Public Investment Management (PIM) approaches - end of December 2025.

          Economic indicators

          Economic growth in 2024, as noted, was resilient but slowed in the second half of last year. The Fund forecasts that the economic recovery will continue to slow in 2025 due to even tighter labor market conditions and the impact of Russian attacks on energy infrastructure.

          The IMF noted that the National Bank's monetary policy tightening in response to the current spike in inflation, driven mainly by rising food prices, was appropriate. At the same time, inflation expectations remain anchored and reserves are adequate due to continued external support.

          However, risks to the forecast are extremely high given the uncertainty about the duration of the war. Contingency planning remains important for an adequate response in the event of risks materializing. Greater exchange rate flexibility will help strengthen economic resilience and preserve reserves.

          As noted in the IMF release, financial sector stability is maintained, but continued vigilance is warranted given heightened risks. Institutional weaknesses of the securities market regulator need to be addressed, as indicated. Developing capital market infrastructure, as noted, will be critical to attracting foreign capital for reconstruction needs.

          Covering the budget deficit will require significant external support and fiscal revenues. The adoption of the law on excise tax on tobacco products is welcomed as it will support the implementation of Ukraine's National Revenue Strategy. Accelerated implementation of this strategy, including modernization of tax and customs services, reducing tax evasion and harmonizing Ukrainian legislation with EU standards, is essential to meet priority spending needs. Together with improvements in public investment management, medium-term budgeting and fiscal risk management, this will promote economic growth, investment and fiscal stability. 

          Restructuring of external debt on Eurobonds

          "The Ukrainian authorities also continue to work on finalizing their external debt restructuring strategy for Eurobonds. Reaching an agreement in line with the program's debt sustainability goals is important to reduce fiscal risks and create space for critical spending," the NBU said.

          Addition

          The Executive Board of the International Monetary Fund approved a four-year Extended Fund Facility program for Ukraine on March 31, 2023. Tranches under the program are provided based on the results of quarterly reviews.

          Given the current balance of payments needs, the Ukrainian side has asked the IMF mission to change the structure of disbursements under the EFF program, shifting some of the funding to future reviews. The overall size of the program remains unchanged ($15.5 billion).

          The program remains fully funded with total external financing of $148.8 billion under the baseline scenario and $162.9 billion under the downside scenario, over the 4-year program period, including the use of approximately $50 billion under the G7 ERA Loans mechanism (non-repayable loan secured by revenues from immobilized Russian assets). Full, timely and predictable external support - on terms consistent with debt sustainability - remains very important to fully fund the program, the NBU indicates.

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