IMF Executive Board Decision on Ukraine
September 6, 2000

Ukraine--Misreporting of Information on the International Reserves of the National Bank of Ukraine

Breach of Obligation under Article VIII, Section 5

The Fund has reviewed the report set forth in EBS/00/177 (the "report") on the misreporting by Ukraine of information to the Fund under the Stand-By Arrangements approved for Ukraine on May 10, 1996 (EBS/96/67, Sup. 2) and August 25, 1997 (EBS/97/144, Sup. 1) and adopts the following decision:

    (a) the Fund finds that, with respect to each instance of misreporting specified in
    paragraph 13 of the report, Ukraine breached its obligation under Article VIII, Section 5 to report accurate information to the Fund;

    (b) the Fund notes (i) the voluntary repurchase of SDR 72.5 million made by Ukraine on August 25, 2000, and (ii) the statement set out in the letter of the Prime Minister of Ukraine and the Governor of the National Bank of Ukraine received on August 29, 2000, that Ukraine will ensure that the reserve position of the National Bank of Ukraine is audited on a quarterly basis by a reputable international accounting firm, the reserves of the National Bank of Ukraine will only be held in first-rank international banks, and that no operation will be undertaken that may impair the liquidity of such reserves; and

    (c) the Fund notes the Managing Director's intention to make a complaint for a declaration of ineligibility of Ukraine to use the Fund's general resources under Article XXVI, Section 2 (a) of the Fund's Articles for the breaches of obligation specified in paragraph (a) above in the event that Ukraine, during the period of the extended arrangement approved for Ukraine on September 4, 1998 (EBS/98/144, Sup. 3) or such longer period as the Managing Director deems appropriate but not beyond the end of December 2002, fails to adhere to the understandings set out in paragraph (b)(ii) above.