Speech

Dear President Zelenskyy, Dear Prime Minister Shmyhal, distinguished guests.

Every day of this unjust war brings profound human and economic costs for Ukraine. Since our last gathering, daily attacks have continued countrywide and the Black Sea Grain corridor has been suspended, bringing further hardship to Ukrainians, but also imperiling food security worldwide.

Despite these shocks, Ukrainians have shown remarkable resilience and fortitude: people are going to work, children are going to school; they are out shopping and dining, banks are fully operating, and companies and households are paying their taxes—confidence is improving. But such resilience should not even for a moment overshadow the underlying devastation from Russia’s war in Ukraine.

I also applaud the Ukrainian authorities for their skillful economic management through these challenges. For ensuring public service delivery, for advancing on important, and often difficult, structural reforms through wartime, and for maintaining policies that safeguard macroeconomic and financial stability.

Ukraine’s resilience is evident in that last year’s sharp contraction has given way to a gradual recovery, with growth this year expected in the upper end of our 1–3 percent range. Inflation has decelerated swiftly to single digits. Central bank reserves have strengthened, thanks in part to external support.

An important pillar supporting this resilience is large scale international support—together, we have worked to develop a four-year framework for financing for Ukraine, amounting to US$115 billion.

I am proud to say that the IMF Extended Fund Facility (EFF) program has played a catalytic role in this financing package, while also supporting the Ukrainian authorities in sustaining economic and financial stability, as well as in carrying out critical reforms to promote growth and strengthen governance, and laying the grounds to advance EU accession.

In June, we concluded the first review of this program, bringing the IMF’s support this year to US$3.6 billion, out of the US$15.6 billion available under program. An additional US$900 million will be available in December upon completion of the second review, subject to our Board’s approval.

The authorities have made good progress thus far, including on restoring the pre-war tax system, governance and anti-corruption, and moving toward managed flexibility of the exchange rate from a position of strength. They have indeed shown great ownership and commitment to making their program a success.

Looking ahead, I am thankful for the large number of countries that have provided financing assurances to Ukraine as part of this financing package. That said, as the full-scale war continues, and as social and economic costs mount, Ukraine’s financing needs are also rising. This makes the period ahead more challenging.

The Ukrainian authorities are committed to doing their part – by undertaking important and difficult reforms and mobilizing domestic savings. However, it is also critical that these assurances of external support materialize.

This will ensure predictable financing so that the government can continue to run their hospitals and schools and support essential public services, and weather the rising costs of the war, without jeopardizing their hard-won macroeconomic stability through destabilizing policy choices.

Our latest estimate is that external financing needs for 2024 will be US$3 billion higher than at the time of the first review—with official support of US$31.9 billion required. It is essential for all of us to work together to ensure that such financing continues on the timing and terms necessary to meet Ukraine’s needs and help restore external and debt sustainability.

Ukraine is also looking to rebuild. However, the government is facing tough choices as they work to finance critical expenditures while ensuring room for capital expenditures needed to drive the recovery. Project financing for such recovery and rebuilding is needed at sufficiently concessional terms.

At the same time, efforts to encourage the return of private investors should be redoubled. In this regard, I welcome the many initiatives underway to support private investment, which will go a long way in supporting Ukraine’s recovery.

Let me close by saying that the IMF’s support for Ukraine goes beyond financing. Earlier this month, we reopened our Kyiv office. And we have recently established a Ukraine Capacity Development Fund to help the authorities further strengthen their ability to meet the economic challenges ahead.

We’re seeking US$65 million over five years to scale up capacity development in priority areas supported under the IMF program. I am pleased to share that donors have already pledged contributions of about US$14.5 million. I am confident of your support to this initiative.

The Ukrainian people have shown their determination to get through the war and forge an even stronger country. They, and all who support them, have much to do. May our work together soon be carried out in peace.

Thank you.