IMF, Ukrain reach staff level agreement worth $1.1bn

September 11, 2024 (MLN): The International Monetary Fund (IMF) staff and the Ukrainian authorities have reached a staff-level agreement (SLA) on the Fifth Review of the 4-year Extended Fund Facility (EFF) Arrangement, said a press release issued by the Fund today.

Subject to approval by the IMF Executive Board, Ukraine would have access to about $1.1 billion (SDR 834.8 million).

Program performance remains strong. The statement added that the authorities met all end-of-June quantitative performance criteria (QPCs) and the structural benchmark for the review.

Understandings were also reached on policy settings and reforms to sustain macroeconomic stability as the war continues.

The economy remained resilient in the first half of 2024, but headwinds are intensifying and the outlook remains exceptionally uncertain.

The continuing war will entail fresh financing needs, requiring determined policy efforts by the authorities and large-scale donor support, it said. 

Upside risks to inflation have reduced the scope for further easing through the end of the year, and the monetary policy stance remains appropriate and consistent with achieving the inflation target over the medium term.

"The exchange rate should continue to act as a shock absorber and adjust to market fundamentals, thereby helping to safeguard external stability," it reads.

Appropriate monetary policy combined with the framework of managed exchange rate flexibility should help prevent excessive exchange rate volatility and the de-anchoring of FX and inflation expectations.

A judicious and staged approach to FX liberalization should continue in line with the National Bank of Ukraine’s (NBU) strategy, and consistent with the overall policy mix.

Copyright Mettis Link News