Press Release: IMF Statement on Discussions with Ukraine on First Review under the Extended Fund Facility Arrangement

IMF News, May 31, 2015

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Canonical URL: Press Release: IMF Statement on Discussions with Ukraine on First Review under the Extended Fund Facility Arrangement

Press Release No. 15/243; May 31, 2015.
An IMF mission visited Kyiv during May 12-29 to hold discussions on the first review under the Extended Fund Facility Arrangement (EFF).
Mission chief: Mr. Nikolay Gueorguiev.
End-of-Mission press release reflects preliminary findings of IMF staff and does not necessarily represent the views of the IMF's Executive Board.

Growth projection for 2015 revised down to -9 percent.
Projected end-year inflation for 2015: 46 percent.
Growth in Q1 2015 was hurt by the unresolved conflict in the East, which took a heavier than expected toll on the economy in the first quarter of 2015.
Inflation drivers: one-off pass-through effects of the large exchange rate depreciation in February and the needed energy price increases.

Foreign exchange market: broadly stable in recent months.
Gross international reserves increased to US$9.6 billion at end-April.
Banks’ deposits in domestic currency have been recovering.
Budget outturn in the first months of 2015 was stronger than expected, partly due to temporary factors.
All performance criteria for end-March were met.
All structural benchmarks due in the Spring are on course to be met, albeit some with a delay.

Decisive implementation of economic reforms is indispensable to entrench financial stability and restore robust and sustainable growth.
Authorities’ commitments and policy directions:
- Advance fiscal consolidation.
- Advance energy sector reforms, including further energy tariff adjustments to:
- eliminate the large losses of Naftogaz,
- reduce energy consumption,
- foster energy independence.
- Continue rehabilitation of the banking system.
- Improve the business environment to enhance the productive potential of the economy.
- Complete the ongoing debt operation in line with program objectives to ensure:
- public debt is sustainable with high probability,
- the program remains fully financed (requirements for completion of the review).

Continued financial support for Ukraine’s reform efforts from official and private creditors is described as vital for the success of the program.

International Monetary Fund. Press Release No. 15/243, May 31, 2015.