{
  "title": "Press Release: IMF Executive Board Approves 2-Year US$17.01 Billion Stand-By Arrangement for Ukraine, US$3.19 Billion for immediate Disbursement",
  "publication": "IMF News, April 30, 2014",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr14189",
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  "summary": "Arrangement amount: SDR 10.976 billion (about US$17.01 billion, 800 percent of quota).",
  "publishDate": "2014-04-30",
  "sections": [
    {
      "heading": "Stand-By Arrangement (SBA) — size and disbursement",
      "content": "- Arrangement amount: SDR 10.976 billion (about US$17.01 billion, 800 percent of quota).\n- Approved under the Fund's exceptional access policy.\n- Immediate disbursement: SDR 2.058 billion (about US$3.19 billion).\n  - Of the immediate disbursement, SDR 1.29 billion (about US$2 billion) allocated to budget support.\n- Subsequent disbursements:\n  - Second and third disbursements based on bi-monthly reviews and performance criteria.\n  - Remainder of program period subject to standard quarterly reviews and performance criteria."
    },
    {
      "heading": "Program objectives and core policy pillars",
      "content": "- Overall aim: restore macroeconomic stability, strengthen economic governance and transparency, and launch sound and sustainable economic growth while protecting the most vulnerable.\n- Program focuses:\n  - Maintaining a flexible exchange rate to restore competitiveness.\n  - Stabilizing the financial system.\n  - Gradually reducing the unaffordable fiscal deficit.\n  - Eliminating losses in the energy sector while enhancing social safety nets.\n  - Decisively breaking with problematic past governance practices."
    },
    {
      "heading": "Monetary and exchange rate policy",
      "content": "- Authorities committed to maintaining a flexible exchange rate regime following the floating of the hryvnia.\n- Monetary policy will focus on domestic price stability.\n  - Initially adopt a money-based monetary framework.\n  - With IMF technical assistance, plan to adopt inflation targeting by mid-2015."
    },
    {
      "heading": "Financial sector reforms",
      "content": "- Objectives:\n  - Stabilize the financial system and maintain confidence in banks.\n  - Strengthen balance sheets and financial regulation and supervision.\n- Measures:\n  - Diagnostic studies of the largest banks to assess resilience to economic shocks.\n  - Reforms to restore confidence and stem deposit outflows.\n  - Review and upgrade regulatory and supervisory framework.\n  - Steps to facilitate restructuring of banks’ non-performing loans (NPLs)."
    },
    {
      "heading": "Fiscal policy and public finances",
      "content": "- Fiscal strategy:\n  - Meet near-term spending obligations and gradually reduce the fiscal deficit over the medium-term.\n  - Authorities target a structural fiscal adjustment of 2 percent of GDP over the program horizon.\n  - For 2015–16, aim to reduce the fiscal deficit to about 3 percent of GDP by 2016 through further gradual expenditure-based fiscal adjustment proceeding at a pace matching the economy’s speed of recovery.\n- Wage policy:\n  - Aim to keep the minimum wage and public wage growth in line with productivity."
    },
    {
      "heading": "Energy sector reforms",
      "content": "- Objective: eliminate large quasi-fiscal losses of Naftogaz by 2018 and strengthen transparency and governance.\n- Measures:\n  - Gradual, meaningful, and broad-based gas and heating tariff increases starting from May 2014.\n  - Enhanced social assistance measures to protect the poorest from energy price adjustments.\n  - Structural and governance reforms in Naftogaz to improve governance and reduce operational costs.\n- Importance of resolving gas dispute:\n  - Early agreement on repayment of accumulated arrears and the gas price dispute with Gazprom emphasized to prevent disruptions in energy trade."
    },
    {
      "heading": "Governance, transparency, and business climate reforms",
      "content": "- Measures already taken and planned:\n  - New public procurement law enacted to reduce misuse of public resources.\n  - Address governance issues in state-owned companies and seek recovery of stolen assets.\n  - Build capacity for enforcement of anti-money laundering and anti-corruption legislation.\n  - Enhance effectiveness of the judiciary and tax administration.\n- Intended outcome: reduce corruption, improve the business climate, and remove long-standing barriers to growth."
    },
    {
      "heading": "Recent economic developments (context)",
      "content": "- Macroeconomic vulnerabilities and past policy failures:\n  - Pegged and overvalued exchange rate led to deterioration of competitiveness and slower export growth.\n  - Current account deficit reached over 9 percent of GDP in 2013.\n  - Public debt rose to 41 percent of GDP; external debt at 79 percent of GDP.\n  - International reserves fell to around two months of imports.\n- Policy shift:\n  - National Bank of Ukraine allowed the exchange rate to float in February, helping stabilize financial markets.\n- Ongoing challenges:\n  - Economic activity contracting; international debt markets closed.\n  - Government revenues fallen due to political uncertainty and weak economic performance.\n  - Political tensions in some regions; early presidential elections scheduled for May 25, 2014."
    },
    {
      "heading": "Macroeconomic projections and key statistics",
      "content": "- 2014 outlook:\n  - Real GDP expected to contract by about 5 percent in 2014.\n  - Inflation expected to reach 16 percent at end-2014.\n  - Current account deficit expected to fall to about 4½ percent of GDP.\n  - Gross international reserves expected to stabilize at around 2½ months of import coverage.\n  - Public sector debt expected to rise to 57 percent of GDP.\n  - External debt expected to rise to just below 100 percent of GDP.\n  - Unemployment rate: 8½ percent in 2014.\n- 2015–16 and medium term:\n  - Real GDP growth expected to rebound to 2 percent in 2015, rising to 4-4½ percent in the medium term.\n  - Unemployment expected to decline to 7½ percent by 2016.\n  - Exports projected to grow by over 6 percent a year in 2015–16.\n  - By end-2016, inflation expected to fall to about 6 percent.\n  - NBU expected to build international reserves to cover nearly 4 months of imports by end-2016."
    },
    {
      "heading": "Risks, conditionality, and implementation challenges",
      "content": "- Risks:\n  - Program risks described as high.\n  - Further escalation of tensions with Russia and unrest in the east pose a substantial risk to the economic outlook.\n- Implementation conditions:\n  - Steady and rigorous implementation of policy measures and maintaining broad public support critical for success.\n  - Successful implementation would unlock sizable international official assistance and private capital inflows.\n\nPress Release No. 14/189, April 30, 2014 — IMF Communications Department\n\n---\n\n Content in this bundle\n\n- Pr14189apdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Pr14189cpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Pr14189rpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Ukraine and the IMF\n- Russian Federation 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/pr14189"
    }
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    "Published: April 30, 2014",
    "Arrangement amount: SDR 10.976 billion (about US$17.01 billion, 800 percent of quota).",
    "Approved under the Fund's exceptional access policy.",
    "Immediate disbursement: SDR 2.058 billion (about US$3.19 billion).",
    "Subsequent disbursements:",
    "Overall aim: restore macroeconomic stability, strengthen economic governance and transparency, and launch sound and sustainable economic growth while protecting the most vulnerable.",
    "Program focuses:",
    "Authorities committed to maintaining a flexible exchange rate regime following the floating of the hryvnia.",
    "Monetary policy will focus on domestic price stability.",
    "Objectives:",
    "Measures:",
    "Fiscal strategy:",
    "Wage policy:",
    "Objective: eliminate large quasi-fiscal losses of Naftogaz by 2018 and strengthen transparency and governance.",
    "Measures:",
    "Importance of resolving gas dispute:",
    "Measures already taken and planned:",
    "Intended outcome: reduce corruption, improve the business climate, and remove long-standing barriers to growth.",
    "Macroeconomic vulnerabilities and past policy failures:",
    "Policy shift:",
    "Ongoing challenges:",
    "2014 outlook:",
    "2015–16 and medium term:",
    "Risks:",
    "Implementation conditions:",
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    "[Ukraine and the IMF](http://www.imf.org/external/country/UKR/index.htm)",
    "[Russian Federation and the IMF](http://www.imf.org/external/country/RUS/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)"
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