## Press Release: Statement by IMF Managing Director Christine Lagarde on Ukraine

_IMF News, February 12, 2015_

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**Canonical URL:** [Press Release: Statement by IMF Managing Director Christine Lagarde on Ukraine](https://www.imf.org/en/news/articles/2015/09/14/01/49/pr1550)

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## Bibliographic details
- Published: February 12, 2015

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### Program agreement and overview
- IMF team in Kiev reached a staff-level agreement with the Ukrainian government on a new economic reform program.
- The program would be supported by an Extended Fund Facility of SDR 12.35 billion (about $17.5 billion, €15.5 billion) from the IMF.
- The arrangement is a four-year program aimed at:
  - supporting immediate economic stabilization in Ukraine;
  - implementing a set of bold policy reforms to restore robust growth over the medium term;
  - improving living standards for the Ukrainian people.
- Christine Lagarde intends to recommend the program for consideration to the IMF Executive Board.

### Reasons the IMF believes the program can succeed
- First: demonstrated commitment to reform
  - 2014 fiscal deficit: 4.6 percent of GDP vs. a target of 5.8 percent.
  - Adoption of a flexible exchange rate regime.
  - Significant increases in household energy prices in 2014:
    - household gas prices to 56 percent of the import price;
    - heating prices to about 40 percent of the import price.
  - Initiation of efforts to strengthen the country's anti-corruption and anti-money laundering framework.
- Second: front-loaded actions going forward
  - Government commitments under the program include:
    - further sizable energy tariff increases;
    - bank restructuring;
    - governance reforms of state-owned enterprises;
    - legal changes to implement the anti-corruption and judicial reform agenda.
  - Measures will be taken to strengthen and better target the social safety net to help cushion adjustment, especially for the poorest groups.
- Third: increased external support
  - Change from a Stand-By Arrangement to an Extended Fund Facility provides:
    - more funding;
    - more time;
    - more flexibility;
    - better financing terms for Ukraine to implement reforms.
  - IMF resources will be complemented by other bilateral and multilateral financing.
  - The Ukrainian government intends to hold consultations with holders of their sovereign debt to improve medium-term sustainability.
  - From these various sources taken together, a total financing package of around $40 billion is estimated over the four year period.

### Risks and macroeconomic approach
- The program is described as ambitious, tough, realistic, and not without risk.
- Main identified risk:
  - Geopolitical developments that may affect market and investor confidence, particularly the conflict in the East.
- Program design response:
  - The program is based on conservative macroeconomic assumptions to buffer further the impact of the conflict.
  - Resolution of the conflict would strengthen and speed up prospects for macroeconomic stabilization and growth.

### Final assessment
- Effective implementation—after consideration and approval by the IMF Executive Board—can represent a turning point for Ukraine.
- The program offers an important opportunity for Ukraine to move its economy forward at a critical moment in the country's history, contingent on steadfast implementation and supportive external conditions.

*Press Release No. 15/50 — Statement by IMF Managing Director Christine Lagarde on Ukraine (February 12, 2015).*

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## References

- [Ukraine and the IMF](http://www.imf.org/external/country/UKR/index.htm)
- [Belgium and the IMF](http://www.imf.org/external/country/BEL/index.htm)
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_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr1550_