IMF Executive Board Completes the Fourth Review of the Extended Fund Facility Arrangement for Ukraine
IMF News, June 28, 2024
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- IMF Executive Board Completes the Fourth Review of the Extended Fund Facility Arrangement for Ukraine
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- Published: June 28, 2024
Review outcome and disbursement
- The Executive Board completed the Fourth Review of the extended arrangement under the Extended Fund Facility (EFF) for Ukraine on June 28, 2024.
- Enabled an immediate disbursement of about US$2.2 billion (SDR 1.66 billion) to Ukraine, to be channeled for budget support.
- This disbursement brings total disbursements under the IMF-supported program to about $7.6 billion.
- Ukraine’s 48-month EFF arrangement has access of SDR 11.6 billion (equivalent to US$15.6 billion, or about 577 percent of quota) and was approved on March 31, 2023.
- The IMF-supported program forms part of a US$122 billion support package for Ukraine, with an external financing envelope of US$122 billion in the baseline and US$141 billion in the downside over the 4-year program period.
Program performance and implementation
- Ukraine’s performance under the EFF is described as strong despite challenging conditions.
- All quantitative performance criteria for end-March were met.
- All structural benchmarks through end-June were implemented on time or with a short delay.
- All quantitative performance criteria and all but one indicative targets for end-March were met; the one indicative target was missed by a small margin.
- The program aims to anchor policies that sustain fiscal, external, price and financial stability, support the economic recovery, enhance governance and strengthen institutions to promote long-term growth in the context of reconstruction and Ukraine’s path to EU accession.
Economic outturns, outlook, and risks
- The economy was more resilient than expected in Q1 2024, showing robust growth outturns, continued disinflation, and maintenance of adequate reserves.
- The outlook for the remainder of 2024 and into 2025 has worsened since the Third Review, largely due to devastating attacks on Ukrainian energy infrastructure and uncertainty about the length of Russia’s war against Ukraine.
- The overall outlook remains subject to exceptionally high uncertainty and high risks from war-related uncertainty.
- Continued external disbursements, strong domestic resource mobilization, and careful liquidity management are necessary for Ukraine to meet its financing needs.
Policy recommendations and priorities (from Managing Director Kristalina Georgieva)
- Fiscal policy and budgeting
- Fiscal policies for the remainder of 2024, together with preparation for the 2025 budget, should be underpinned by steadfast revenue mobilization efforts aligned with the National Revenue Strategy.
- Measures that erode the tax base should be avoided.
- Strengthen tax and customs administration together with the Economic Security Bureau of Ukraine (ESBU).
- Further strengthen medium-term budgeting, fiscal risks and transparency, and public investment management.
- An external commercial debt treatment in line with debt sustainability objectives under the program will be necessary to create space for critical spending and restore debt sustainability in line with the authorities’ strategy.
- Monetary and FX policy
- Continued exchange rate flexibility under the managed exchange rate regime will help strengthen resilience to external shocks.
- Continued disinflation combined with well-anchored inflation expectations and FX cash market stability suggest scope for further monetary policy easing.
- A state-dependent and gradual approach to the easing of FX controls remains essential to safeguard FX reserves.
- Authorities’ efforts to avoid monetary financing should continue.
- Financial sector and governance
- Continue efforts to strengthen bank resolution and supervision, governance, and contingency planning.
- Steadfast reforms to enhance anti-corruption and governance frameworks, including ensuring the effectiveness of anticorruption institutions, remain essential to contain fiscal risks, secure donor confidence, enhance growth, and support the path to EU accession.
Key economic and social indicators (selected figures from Table 1)
- Nominal GDP (billions of Ukrainian hryvnias): 2021: 5,451; 2022: 5,239; 2023: 6,538; 2024: 7,485; 2025: 8,744; 2026: 9,718; 2027: 10,664.
- Real GDP (percent change): 2021: 3.4; 2022: -28.8; 2023: 5.3; 2024: 2.5-3.5; 2025: 5.5; 2026: 4.5.
- Contributions to GDP (selected):
- Domestic demand (2021–2027): 12.9; -22.9; 13.9; 5.8; 6.1; 7.4; 7.1.
- Private consumption (2021–2026): 4.7; -16.8; 3.7; 4.1; 4.9.
- Investment (2021–2024): 8.1; -18.6; 3.0; 3.8.
- Net exports (2021–2026): -9.5; -5.9; -8.6; -3.3; -2.0; -2.6.
- Price measures:
- GDP deflator: 2021: 24.8; 2022: 34.9; 2023: 18.5; 2024: 11.7; 2025: 10.7; 2026: 5.0.
- Consumer prices (period average): 2021: 9.4; 2022: 20.2; 2023: 5.2; 2024: 8.3; 2025: 6.2.
- Consumer prices (end of period): 2021: 10.0; 2022: 26.6; 2023: 5.1; 2024: 8.0; 2025: 7.0.
- Labor and wages:
- Unemployment rate (ILO definition; period average, percent): 2021: 9.8; 2022: 24.5; 2023: 19.1; 2024: 14.8; 2025: 14.3; 2026: 10.4.
- Nominal wages (average): 2021: 20.8; 2022: 1.0; 2023: 20.1; 2024: 15.7; 2025: 14.5; 2026: 10.5.
- Real wages (average): 2021: -16.0; 2022: 6.4; 2023: 8.6; 2024: 6.8; 2025: 7.8.
- Savings and investment (percent of GDP):
- Savings: 2021: 17.0; 2022: 10.9; 2023: 9.2; 2024: 13.4; 2025: 16.0; 2026: 12.7.
- Investment: 2021: 12.1; 2022: 15.1; 2023: 16.7; 2024: 16.1; 2025: 19.9; 2026: 21.0.
- General government (percent of GDP):
- Fiscal balance: 2021: -4.0; 2022: -15.6; 2023: -19.6; 2024: -14.2; 2025: -7.5; 2026: -4.9; 2027: -3.6.
- Fiscal balance, excl. grants: 2021: -24.8; 2022: -26.1; 2023: -20.9; 2024: -10.4; 2025: -6.2; 2026: -4.8.
- Public and publicly-guaranteed debt (percent of GDP): 2021: 50.5; 2022: 77.7; 2023: 82.3; 2024: 97.3; 2025: 97.7; 2026: 96.8; 2027: 94.5.
- Money and credit (end of period, percent change):
- Base money: 2021: 11.2; 2022: 19.6; 2023: 23.3; 2024: 17.9; 2025: 11.9; 2026: 9.0.
- Broad money: 2021: 12.0; 2022: 23.0; 2023: 15.8; 2024: 10.6.
- Credit to nongovernment: 2021: 8.4; 2022: -3.1; 2023: -0.5; 2024: 17.7; 2025: 18.2.
- Balance of payments and reserves:
- Current account balance (percent of GDP): 2021: -1.9; 2022: -5.8; 2023: -6.9; 2024: -6.6.
- Gross reserves (end of period, billions of U.S. dollars): 2021: 30.9; 2022: 28.5; 2023: 40.5; 2024: 41.8; 2025: 43.0; 2026: 48.0; 2027: 47.4.
- Months of next year's imports of goods and services: 2021: 3.9; 2022: 5.4; 2023: 5.7.
- Percent of short-term debt (remaining maturity): 2021: 67.5; 2022: 64.3; 2023: 87.3; 2024: 97.9; 2025: 94.2; 2026: 109.2; 2027: 103.1.
- Percent of the IMF composite metric (float): 2021: 104.4; 2022: 103.6; 2023: 124.2; 2024: 113.7; 2025: 110.3; 2026: 114.7; 2027: 111.2.
- Trade volumes and terms:
- Goods exports (annual volume change in percent): 2021: 35.0; 2022: -44.4; 2023: 4.6.
- Goods imports (annual volume change in percent): 2021: -23.9; 2022: 21.6; 2023: 8.9; 2024: 7.5; 2025: 10.8.
- Goods terms of trade (percent change): 2021: -8.4; 2022: -11.6; 2023: 3.6; 2024: 0.3; 2025: -1.4; 2026: 1.2.
- Exchange rate:
- Hryvnia per U.S. dollar (end of period): 2021: 27.3; 2022: 36.6; 2023: 38.0.
- Hryvnia per U.S. dollar (period average): 2021: 32.3; 2022: 36.7.
- Real effective rate (deflator-based, percent change): 2021: 10.3; 2022: 28.2.
- Memorandum items:
- Per capita GDP / Population (2017): US$2,640 / 44.8 million.
- Literacy / Poverty rate (2022 est): 100 percent / 25 percent.
IMF Communications Department — Press Release No. 24/252 (June 28, 2024).
