{
  "title": "Press Release: IMF Approves Stand-by Credit and Second STF Drawing for Ukraine",
  "publication": "IMF News, April 7, 1995",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9519",
  "canonical": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9519",
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  "summary": "The IMF approved credits for Ukraine totaling SDR 1,246.62 million (about $1.96 billion) to support the Government's 1995 economic reform program.",
  "publishDate": "1995-04-07",
  "sections": [
    {
      "heading": "Summary of Approval and Financing",
      "content": "- The IMF approved credits for Ukraine totaling SDR 1,246.62 million (about $1.96 billion) to support the Government's 1995 economic reform program.\n- Allocation of the total:\n  - SDR 997.3 million (about $1.57 billion) under a one-year stand-by credit.\n  - SDR 249.3 million (about $392 million) as Ukraine's second drawing under the systemic transformation facility (STF).\n- The first STF drawing, SDR 249.3 million, was approved on October 26, 1994 (Press Release No. 94/76).\n- Ukraine joined the IMF on September 3, 1992. Its quota is SDR 997.3 million (about $1.57 billion), and its outstanding use of IMF credit currently totals SDR 249 million (about $391 million)."
    },
    {
      "heading": "Background and Policy Context",
      "content": "- The Government that took office in the summer of 1994 took measures under the first STF program to address a deep economic crisis.\n- Measures in the final quarter of 1994 included:\n  - Containing a prospective explosion of the budget deficit.\n  - Limiting the growth of credit to enterprises.\n  - Beginning liberalization of prices and the exchange and trade system.\n- Policy implementation under the first STF program was described as generally good, with most policy commitments eventually achieved and a tightening of financial policies that surpassed expectations.\n- Persistent difficulties remained in inflation, the balance of payments, and economic activity, highlighting large macroeconomic imbalances and structural impediments to output recovery."
    },
    {
      "heading": "The 1995 Program: Objectives and Targets",
      "content": "- Key aims:\n  - Achieve a swift and enduring reduction in inflation.\n  - Liberate the economy's export potential.\n  - Implement meaningful structural reforms.\n  - Normalize financial relations with creditors.\n- Specific inflation targets:\n  - Reduce monthly inflation to low single digits by the middle of the year.\n  - Reduce inflation to about 1 percent by end-1995.\n- Output and external balance objectives:\n  - Limit the decline in real GDP to 10 percent in 1995.\n  - Contain the deficit in the current account of the balance of payments to about $1.3 billion in 1995.\n- Fiscal policy:\n  - State budget deficit targeted to decline to 3.3 percent of GDP in 1995 from 8.6 percent in 1994, entirely on the basis of a reduction in expenditure.\n  - Expenditure reductions to reflect government withdrawal from operations better discharged by the nongovernment sector, including:\n    - Substantial withdrawal from agricultural financing.\n    - Replacement of budget subsidies to the coal industry by a system of intra-industry transfers.\n    - Curtailment of budget lending.\n  - Other expenditure restraint measures: strict wage policy in the budgetary sphere, cash limits in certain areas, further increases in public utility charges, housing rents, and energy prices to households to contain subsidies.\n- Monetary and labor policy:\n  - Monetary projections support keeping the rate of monetary expansion substantially below the projected rate of increase in nominal activity in the first half of the year.\n  - Program envisages a policy of wage restraint to support adjustment and limit prospective unemployment increases."
    },
    {
      "heading": "Structural Reforms",
      "content": "- Measures to remove administrative controls and provide incentives for enterprise innovation, market entry, and cost reduction.\n- Price policy:\n  - Government will substantially reduce price controls by the end of the year.\n  - Adjust prices for subsidized goods, continually reducing the level of subsidization.\n- Privatization program:\n  - Privatization through vouchers of about 8,000 medium and large-scale enterprises, as well as the majority of small-scale enterprises, by the end of the year.\n  - Sales to foreign investors contemplated through individually negotiated deals and tenders of blocks of shares in the auction process.\n- Trade liberalization:\n  - Further reform of the trade system to remove impediments to export promotion.\n  - Most export quotas already eliminated; preregistration scheme streamlined.\n  - Removal of the export quota on grain planned in the course of the year."
    },
    {
      "heading": "Social Protection and Mitigating Social Costs",
      "content": "- Authorities prioritize protecting the most vulnerable social groups from adjustment and liberalization impacts.\n- Budget provides for an increase in spending on social protection by close to 2 1/2 percent of GDP.\n- Existing benefits will be indexed to wage increases, with, where necessary, a flattening of the pension-benefit structure to allow minimum incomes to keep pace with inflation.\n- With World Bank assistance, a review of all social benefits will begin in 1995, including design of measures to strengthen the pension and unemployment compensation systems."
    },
    {
      "heading": "Challenges and External Support",
      "content": "- Restructuring the Ukrainian economy and restoring external viability extends beyond 1995 and will require continued adjustment and external assistance over the medium term.\n- The program has received pledges of support from the international community in the form of grants, credits, and debt rescheduling for a total of US$1.5 billion."
    },
    {
      "heading": "Ukraine: Selected Economic Indicators",
      "content": "- Real GDP (percent change)\n  - 1992: –17\n  - 1993: –23\n  - 1994: –10\n  - 1995: (program target) — limit decline to 10 percent\n- Consumer prices (percent change)\n  - 1992: 1,210\n  - 1993: 4,735\n  - 1994: 891\n  - 1995: 389\n- External current account balance (deficit –) (millions of dollars)\n  - 1992: ---\n  - 1993: –849\n  - 1994: –1,396\n  - 1995: –1,335\n- State budget balance (deficit –) (percent of GDP)\n  - 1992: –30.4\n  - 1993: –10.1\n  - 1994: –8.6\n  - 1995: –3.3\n- Sources: Ukrainian authorities; and IMF staff estimates.\n- Estimated.\n- Program.\n\nInternational Monetary Fund — Press Release No. 95/19 (April 7, 1995)\n\n---\n\n\n References\n\n- Ukraine 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/pr9519"
    }
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    "Published: April 7, 1995",
    "The IMF approved credits for Ukraine totaling SDR 1,246.62 million (about $1.96 billion) to support the Government's 1995 economic reform program.",
    "Allocation of the total:",
    "The first STF drawing, SDR 249.3 million, was approved on October 26, 1994 (Press Release No. 94/76).",
    "Ukraine joined the IMF on September 3, 1992. Its quota is SDR 997.3 million (about $1.57 billion), and its outstanding use of IMF credit currently totals SDR 249 million (about $391 million).",
    "The Government that took office in the summer of 1994 took measures under the first STF program to address a deep economic crisis.",
    "Measures in the final quarter of 1994 included:",
    "Policy implementation under the first STF program was described as generally good, with most policy commitments eventually achieved and a tightening of financial policies that surpassed expectations.",
    "Persistent difficulties remained in inflation, the balance of payments, and economic activity, highlighting large macroeconomic imbalances and structural impediments to output recovery.",
    "Key aims:",
    "Specific inflation targets:",
    "Output and external balance objectives:",
    "Fiscal policy:",
    "Monetary and labor policy:",
    "Measures to remove administrative controls and provide incentives for enterprise innovation, market entry, and cost reduction.",
    "Price policy:",
    "Privatization program:",
    "Trade liberalization:",
    "Authorities prioritize protecting the most vulnerable social groups from adjustment and liberalization impacts.",
    "Budget provides for an increase in spending on social protection by close to 2 1/2 percent of GDP.",
    "Existing benefits will be indexed to wage increases, with, where necessary, a flattening of the pension-benefit structure to allow minimum incomes to keep pace with inflation.",
    "With World Bank assistance, a review of all social benefits will begin in 1995, including design of measures to strengthen the pension and unemployment compensation systems.",
    "Restructuring the Ukrainian economy and restoring external viability extends beyond 1995 and will require continued adjustment and external assistance over the medium term.",
    "The program has received pledges of support from the international community in the form of grants, credits, and debt rescheduling for a total of US$1.5 billion.",
    "Real GDP (percent change)",
    "Consumer prices (percent change)",
    "External current account balance (deficit –) (millions of dollars)",
    "State budget balance (deficit –) (percent of GDP)",
    "Sources: Ukrainian authorities; and IMF staff estimates.",
    "*Estimated.",
    "**Program.",
    "[Ukraine and the IMF](http://www.imf.org/external/country/UKR/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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