{ "title": "Press Release: IMF Approves US$16.4 Billion Stand-By Arrangement for Ukraine", "publication": "IMF News, November 5, 2008", "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr08271", "canonical": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr08271", "overlayPath": "/en/news/articles/2015/09/14/01/49/pr08271/index.md", "summary": "The Executive Board approved a two-year Stand-By Arrangement (SBA) for SDR 11 billion (about US$16.4 billion).", "publishDate": "2008-11-05", "sections": [ { "heading": "IMF Approval and Immediate Financing", "content": "- The Executive Board approved a two-year Stand-By Arrangement (SBA) for SDR 11 billion (about US$16.4 billion).\n- The SBA entails exceptional access equivalent to 802 percent of Ukraine's quota in the Fund and was approved under the Fund's fast-track Emergency Financing Mechanism.\n- Immediate disbursement enabled: SDR 3 billion (about US$4.5 billion)." }, { "heading": "Program Objectives and Macroeconomic Strategy", "content": "- Program aims: restore financial and macroeconomic stability, strengthen confidence, and facilitate adjustment to a large terms-of-trade shock.\n- Core policy pillars:\n - Adopt a flexible exchange rate regime with targeted intervention and phase out recent exchange controls as confidence rebuilds.\n - Pre-emptive bank recapitalization and decisive bank resolution processes.\n - Prudent fiscal policy coupled with tighter monetary policy.\n - Strengthen independence of the National Bank of Ukraine and accelerate progress toward inflation targeting." }, { "heading": "Monetary and Exchange Rate Policy Measures", "content": "- Implement a flexible exchange rate regime; base money to serve as the near-term anchor until inflation targeting is implemented.\n- Near-term monetary tightening to achieve the 2009 inflation objective of 17 percent.\n- Eliminate exchange rate controls as soon as possible.\n- Improve foreign exchange market operation, including cancellation of the foreign exchange transactions tax and a more transparent intervention policy." }, { "heading": "Financial Sector Measures", "content": "- Prepare a comprehensive bank resolution strategy including resolution of problem banks and recapitalization of viable banks.\n- Prominvest Bank (the sixth largest bank) was resolved through a sale to a strategic investor.\n- Ensure viable banks have access to liquidity.\n- Increase deposit insurance coverage to Hrv150,000 (about €20,000) from Hrv50,000 — covering 99 percent of individual accounts.\n- Strengthen bank monitoring with enhanced on- and off-site inspections and improved cross-border supervisory cooperation.\n- Proactive strategy to resolve corporate and household debt problems." }, { "heading": "Fiscal Policy Measures", "content": "- Adopt a prudent fiscal stance while accommodating recession-related social expenditures, including higher funding for unemployment insurance and targeted income support.\n- Fiscal targets:\n - Deficit would not exceed 1 percent of GDP in 2008.\n - General government budget would be balanced in 2009 (excluding bank recapitalization costs).\n- Measures to achieve targets: expenditure restraint, phased increase in energy tariffs, adjust minimum wage/pension/social transfer increases in line with projected 2009 inflation.\n- Program allows expansion of social safety nets if needed." }, { "heading": "Recent Economic Developments (Annex)", "content": "- Growth since 2000 averaged more than 7 percent.\n- By mid-2008: credit growth exceeded 70 percent; CPI inflation exceeded 30 percent; wage growth 30-40 percent; imports surged at an annual rate of 50-60 percent; current account deficit reached 7 percent of GDP in Q2 2008.\n- Manufacturing contracted sharply: a 5-percent contraction in September (manufacturing sector).\n- Deposit outflows: at least US$3 billion—4 percent of deposits—withdrawn during the first three weeks of October following receivership of Prominvest Bank.\n- Gross reserves fell from US$38 billion to US$32 billion due to NBU intervention in October.\n- Authorities imposed exchange controls and implemented anti-crisis legislation." }, { "heading": "Program Summary, Scenarios, and Projections", "content": "- Program assumes a global recession and continued deleveraging in international credit markets in 2009, implying a recession in Ukraine with deteriorating exports, limited external financing, and a credit crunch.\n- Projected impact on output: a 3 percent decline in 2009 (consistent with Ukraine's 2004–05 experience).\n- Inflation path under program: expected to decrease to 17 percent by end-2009 from the projected 25.5 percent in 2008.\n- Current account: projected to compress to about a 2 percent of GDP deficit from the mid-2008 level of 7 percent.\n- Recovery scenario: assuming global recovery in the second half of 2009, economy could return to estimated potential growth of 5-6 percent by 2011 with inflation at 5-7 percent by late 2011.\n- Current account deficits projected to remain small in 2010 and moderate thereafter, allowing reserves to rise." }, { "heading": "Key Assumptions", "content": "- (i) Increased exchange rate flexibility as from 2008.\n- (ii) Convergence of natural gas import prices to Western European levels (adjusted for transit) by 2010.\n- (iii) Pass-through of rising energy import prices in 2009.\n- (iv) Public-financed recapitalization of banks for a total amount of Hrv 54 bln (10 bln by end-2008 and 44 bln in the first half of 2009)." }, { "heading": "Selected Economic and Social Indicators (2005–09)", "content": "- Nominal GDP (billions of hryvnias): 2005: 441; 2006: 544; 2007: 713; 2008: 993; 2009 Proj.: 1,112\n- Real GDP (percent change): 2005: 2.7; 2006: 7.3; 2007: 7.6; 2008: 6.0; 2009 Proj.: -3.0\n - Contributions to 2009 change: Domestic demand: -14.3; Net exports: 11.3\n- Unemployment rate (ILO definition; percent): 2005: 7.2; 2006: 6.8; 2007: 6.4; 2008: 9.5; 2009 Proj.: (not separately listed)\n- Consumer prices (period average): 2005: 13.5; 2006: 9.1; 2007: 12.8; 2008: 25.6; 2009 Proj.: 21.0\n- Consumer prices (end of period): 2005: 10.3; 2006: 11.6; 2007: 16.6; 2008: 25.5; 2009 Proj.: 17.0\n- Nominal monthly wages (average): 2005: 36.7; 2006: 29.2; 2007: 29.7; 2008: 37.1; 2009 Proj.: 10.5\n- Real monthly wages (average): 2005: 20.4; 2006: 18.4; 2007: 15.0; 2008: -8.7\n- Public finance (percent of GDP) — Cash balance excluding banks recap.: 2005: -2.3; 2006: -1.4; 2007: -2.0; 2008: -1.0; 2009 Proj.: 0.0\n- Privatization proceeds: 2005: 5.0; 2006: 0.4; 2007: 0.6; 2008: 0.2; 2009 Proj.: 0.1\n- Net domestic financing: 2005: -3.3; 2006: -0.4; 2007: 0.3; 2008: 1.8; 2009 Proj.: 4.4\n- Public debt (percent of GDP): 2005: 18.7; 2006: 15.7; 2007: 13.0; 2008: 10.6; 2009 Proj.: 17.4\n- Base money (end of period, percent change): 2005: 53.9; 2006: 17.5; 2007: 46.0; 2008: 33.0; 2009 Proj.: 10.9\n- Broad money (end of period, percent change): 2005: 54.4; 2006: 34.5; 2007: 51.7; 2008: 37.2; 2009 Proj.: 9.4\n- Credit to nongovernment (end of period, percent change): 2005: 61.8; 2006: 70.6; 2007: 74.0; 2008: 40.9; 2009 Proj.: -9.8\n- Total external debt (percent of GDP) 2/: 2005: 45.1; 2006: 49.7; 2007: 57.8; 2008: 54.3; 2009 Proj.: 78.2\n- Current account balance (percent of GDP): 2005: 2.9; 2006: -1.5; 2007: -3.7; 2008: -6.2\n- Foreign direct investment (percent of GDP): 2005: 8.7; 2006: 5.3; 2007: 6.5; 2008: 6.2\n- Gross reserves (end of period, billions of U.S. dollars): 2005: 19.4; 2006: 22.3; 2007: 32.4; 2008: 31.4; 2009 Proj.: 30.7\n- Gross reserves (in months of next year's imports): 2005: 3.7; 2006: 4.0; 2007: 5.1; 2008: 4.5\n- Goods exports (annual volume change in percent): 2005: 3.2; 2006: 0.8\n- Goods imports (annual volume change in percent): 2005: 12.5; 2006: 20.3; 2007: 16.0; 2008: -19.7\n- Goods and services terms of trade (percent change): 2005: 4.9; 2006: 1.5; 2007: 7.4; 2008: 8.9\n- Social indicators: Per capita GDP: US$ 2,282 (2006); Poverty (percent of population): 8.0 (2006; World Bank estimate); Life expectancy at birth: 68.2 years (2006); Infant mortality (per 1,000): 16.0 (2005); Gross primary enrollment (percent net): 84 (2005)\n\nSource: Press Release No. 08/271 (November 5, 2008).\n\n---\n\n Content in this bundle\n\n- Pr08271rpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Ukraine and the IMF\n- Portugal and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr08271" } ], "bullets": [ "[Markdown version](/en/news/articles/2015/09/14/01/49/pr08271/index.md)", "[Structured JSON version](/en/news/articles/2015/09/14/01/49/pr08271/index.json)", "[Bundle manifest](/en/news/articles/2015/09/14/01/49/pr08271/bundle-manifest.json)", "Published: November 5, 2008", "The Executive Board approved a two-year Stand-By Arrangement (SBA) for SDR 11 billion (about US$16.4 billion).", "The SBA entails exceptional access equivalent to 802 percent of Ukraine's quota in the Fund and was approved under the Fund's fast-track Emergency Financing Mechanism.", "Immediate disbursement enabled: SDR 3 billion (about US$4.5 billion).", "Program aims: restore financial and macroeconomic stability, strengthen confidence, and facilitate adjustment to a large terms-of-trade shock.", "Core policy pillars:", "Implement a flexible exchange rate regime; base money to serve as the near-term anchor until inflation targeting is implemented.", "Near-term monetary tightening to achieve the 2009 inflation objective of 17 percent.", "Eliminate exchange rate controls as soon as possible.", "Improve foreign exchange market operation, including cancellation of the foreign exchange transactions tax and a more transparent intervention policy.", "Prepare a comprehensive bank resolution strategy including resolution of problem banks and recapitalization of viable banks.", "Prominvest Bank (the sixth largest bank) was resolved through a sale to a strategic investor.", "Ensure viable banks have access to liquidity.", "Increase deposit insurance coverage to Hrv150,000 (about €20,000) from Hrv50,000 — covering 99 percent of individual accounts.", "Strengthen bank monitoring with enhanced on- and off-site inspections and improved cross-border supervisory cooperation.", "Proactive strategy to resolve corporate and household debt problems.", "Adopt a prudent fiscal stance while accommodating recession-related social expenditures, including higher funding for unemployment insurance and targeted income support.", "Fiscal targets:", "Measures to achieve targets: expenditure restraint, phased increase in energy tariffs, adjust minimum wage/pension/social transfer increases in line with projected 2009 inflation.", "Program allows expansion of social safety nets if needed.", "Growth since 2000 averaged more than 7 percent.", "By mid-2008: credit growth exceeded 70 percent; CPI inflation exceeded 30 percent; wage growth 30-40 percent; imports surged at an annual rate of 50-60 percent; current account deficit reached 7 percent of GDP in Q2 2008.", "Manufacturing contracted sharply: a 5-percent contraction in September (manufacturing sector).", "Deposit outflows: at least US$3 billion—4 percent of deposits—withdrawn during the first three weeks of October following receivership of Prominvest Bank.", "Gross reserves fell from US$38 billion to US$32 billion due to NBU intervention in October.", "Authorities imposed exchange controls and implemented anti-crisis legislation.", "Program assumes a global recession and continued deleveraging in international credit markets in 2009, implying a recession in Ukraine with deteriorating exports, limited external financing, and a credit crunch.", "Projected impact on output: a 3 percent decline in 2009 (consistent with Ukraine's 2004–05 experience).", "Inflation path under program: expected to decrease to 17 percent by end-2009 from the projected 25.5 percent in 2008.", "Current account: projected to compress to about a 2 percent of GDP deficit from the mid-2008 level of 7 percent.", "Recovery scenario: assuming global recovery in the second half of 2009, economy could return to estimated potential growth of 5-6 percent by 2011 with inflation at 5-7 percent by late 2011.", "Current account deficits projected to remain small in 2010 and moderate thereafter, allowing reserves to rise.", "(i) Increased exchange rate flexibility as from 2008.", "(ii) Convergence of natural gas import prices to Western European levels (adjusted for transit) by 2010.", "(iii) Pass-through of rising energy import prices in 2009.", "(iv) Public-financed recapitalization of banks for a total amount of Hrv 54 bln (10 bln by end-2008 and 44 bln in the first half of 2009).", "Nominal GDP (billions of hryvnias): 2005: 441; 2006: 544; 2007: 713; 2008: 993; 2009 Proj.: 1,112", "Real GDP (percent change): 2005: 2.7; 2006: 7.3; 2007: 7.6; 2008: 6.0; 2009 Proj.: -3.0", "Unemployment rate (ILO definition; percent): 2005: 7.2; 2006: 6.8; 2007: 6.4; 2008: 9.5; 2009 Proj.: (not separately listed)", "Consumer prices (period average): 2005: 13.5; 2006: 9.1; 2007: 12.8; 2008: 25.6; 2009 Proj.: 21.0", "Consumer prices (end of period): 2005: 10.3; 2006: 11.6; 2007: 16.6; 2008: 25.5; 2009 Proj.: 17.0", "Nominal monthly wages (average): 2005: 36.7; 2006: 29.2; 2007: 29.7; 2008: 37.1; 2009 Proj.: 10.5", "Real monthly wages (average): 2005: 20.4; 2006: 18.4; 2007: 15.0; 2008: -8.7", "Public finance (percent of GDP) — Cash balance excluding banks recap.: 2005: -2.3; 2006: -1.4; 2007: -2.0; 2008: -1.0; 2009 Proj.: 0.0", "Privatization proceeds: 2005: 5.0; 2006: 0.4; 2007: 0.6; 2008: 0.2; 2009 Proj.: 0.1", "Net domestic financing: 2005: -3.3; 2006: -0.4; 2007: 0.3; 2008: 1.8; 2009 Proj.: 4.4", "Public debt (percent of GDP): 2005: 18.7; 2006: 15.7; 2007: 13.0; 2008: 10.6; 2009 Proj.: 17.4", "Base money (end of period, percent change): 2005: 53.9; 2006: 17.5; 2007: 46.0; 2008: 33.0; 2009 Proj.: 10.9", "Broad money (end of period, percent change): 2005: 54.4; 2006: 34.5; 2007: 51.7; 2008: 37.2; 2009 Proj.: 9.4", "Credit to nongovernment (end of period, percent change): 2005: 61.8; 2006: 70.6; 2007: 74.0; 2008: 40.9; 2009 Proj.: -9.8", "Total external debt (percent of GDP) 2/: 2005: 45.1; 2006: 49.7; 2007: 57.8; 2008: 54.3; 2009 Proj.: 78.2", "Current account balance (percent of GDP): 2005: 2.9; 2006: -1.5; 2007: -3.7; 2008: -6.2", "Foreign direct investment (percent of GDP): 2005: 8.7; 2006: 5.3; 2007: 6.5; 2008: 6.2", "Gross reserves (end of period, billions of U.S. dollars): 2005: 19.4; 2006: 22.3; 2007: 32.4; 2008: 31.4; 2009 Proj.: 30.7", "Gross reserves (in months of next year's imports): 2005: 3.7; 2006: 4.0; 2007: 5.1; 2008: 4.5", "Goods exports (annual volume change in percent): 2005: 3.2; 2006: 0.8", "Goods imports (annual volume change in percent): 2005: 12.5; 2006: 20.3; 2007: 16.0; 2008: -19.7", "Goods and services terms of trade (percent change): 2005: 4.9; 2006: 1.5; 2007: 7.4; 2008: 8.9", "Social indicators: Per capita GDP: US$ 2,282 (2006); Poverty (percent of population): 8.0 (2006; World Bank estimate); Life expectancy at birth: 68.2 years (2006); Infant mortality (per 1,000): 16.0 (2005); Gross primary enrollment (percent net): 84 (2005)", "[Pr08271rpdf (PDF)](/-/media/websites/imf/imported/external/russian/np/sec/pr/2008/pr08271rpdf.pdf){rel=\"external\" type=\"application/pdf\"}", "[Ukraine and the IMF](http://www.imf.org/external/country/UKR/index.htm)", "[Portugal and the IMF](http://www.imf.org/external/country/PRT/index.htm)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "related": [ { "title": "Pr08271rpdf", "role": "document", "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported/external/russian/np/sec/pr/2008/pr08271rpdf.pdf", "binary": { "path": "/-/media/websites/imf/imported/external/russian/np/sec/pr/2008/pr08271rpdf.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/news/articles/2015/09/14/01/49/pr08271/index.md", "json": "/en/news/articles/2015/09/14/01/49/pr08271/index.json", "bundleManifest": "/en/news/articles/2015/09/14/01/49/pr08271/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T17:11:51.908Z" }