Washington, United States
The International Monetary Fund (IMF) said on Friday it has reached a staff-level agreement with the government of Ukraine, opening the door for discussions on a full-fledged loan program.
“IMF staff and the Ukrainian authorities have reached a staff-level agreement on the first and final review under the Program Monitoring with board Involvement (PMB). This agreement, which is subject to IMF Management approval, paves the way to initiate discussions on a fully-fledged Fund-supported program,” the statement read.
An IMF team met with Ukrainian officials in Warsaw on February 13-17. The fund commended Kiev’s “strong” performance under the PMB and said that “all quantitative and indicative targets have been met, as well as all the structural benchmarks spanning fiscal policy, governance, and financial sector issues.
IMF delegation head Gavin Gray noted that Ukraine’s economy contracted by 30% in 2022, which is less than expected. He also noted that inflation has begun to decelerate.
“At the same time, the near-term outlook has deteriorated since the PMB was approved in December, including in view of attacks on critical infrastructure. However, the economy is adjusting, and a gradual economic recovery is expected through the course of the year,” Gray was quoted in the statement as saying.
Gray also stressed the need to shore up tax revenues, including through improved revenue administration and restoration of tax policies to their pre-conflict settings. In addition, the country faces “a formidable task of creating fiscal space for war-related repairs and stronger social safety net, leaving no room for measures that erode tax revenues,” the IMF official stated.