Press Release No. 11/43

Press Release No. 11/43
February 15, 2011

An International Monetary Fund (IMF) mission visited Kyiv during February 1-14, to hold discussions on the 2011 Article IV Consultations and the second review under the Stand-By Arrangement (SBA). At the conclusion of the visit, Thanos Arvanitis, Mission Chief for Ukraine, issued the following statement:

“The Ukrainian economy performed better than expected in 2010, with growth exceeding 4 percent of GDP, supported by strong exports and recovering investment and private consumption. The authorities’ economic program supported by the SBA is broadly on track and agreement has been reached on most policies to achieve program objectives for 2011.

“Actions are being taken to support medium-term fiscal consolidation. Pension reform legislation is expected to be enacted in March and public administration reform is underway. To help cushion the impact on households, a more gradual schedule of gas tariff increases has now been agreed and offsetting budgetary measures are being identified to support the combined (general government and Naftogaz) deficit of 3½ percent of GDP for 2011. Discussions with the authorities regarding these measures will continue in the coming weeks aiming to bring the second review under the SBA to the Fund’s Executive Board.

“The monetary policy framework remains appropriate and inflation has declined steadily to 8.2 percent, close to the targets of the National Bank of Ukraine. Discussions focused on measures to strengthen monetary policy operations, develop the local currency market, improve the foreign currency framework, and strengthen further the financial sector.

“The authorities reiterated their goal of achieving robust economic growth over the medium-term. To promote economic activity and improve standards of living the reform momentum should be maintained and the regulatory framework should be further streamlined to improve the still challenging business environment.”