The IMF updated the support program for Ukraine. What has changed?

The International Monetary Fund has updated the memorandum on economic and financial policy within the framework of the third review of the credit program for Ukraine. No new beacons were added, but three "old" requirements were postponed for several months.

In particular, the beacon on changes to the procedural code was moved from March to the end of April, the beacon on the methodology of supervisory risk assessment — from the end of June to the end of December, and the beacon on state property policy — from the end of August to the end of December.

In addition, to the formulation of the permanent structural beacon that all nationalized non-systemic banks should be transferred to the Deposit Guarantee Fund, it was added that they should not be recapitalized.

In general, Ukraine fulfilled 21 of the 35 requirements written in the memorandum.

What needs to be done before the next review

Before the next review of the credit program, Ukraine must fulfill two IMF requirements.

• By the end of March, it is necessary to strengthen support for small and medium-sized businesses through the "5-7-9" loan program.
• By the end of April, it is necessary to make changes to the procedural code — cases in the first instance must be considered by one anti-corruption judge or a panel of three anti-corruption judges. The Cabinet of Ministers has already registered the relevant bill No. 10178.

What requirements must be met next

Ukraine must fulfill a number of important requirements by June 2024 — in particular, the restart of the Bureau of Economic Security, an external audit of the financial condition of central heating companies, the separation of debts before and after February 2022.

Further, by the end of July, it is necessary to conduct an audit of tax benefits and losses from them for the design of the reform, as well as to pass a law that will launch a new independent court (instead of the liquidated OASK) to consider administrative cases against state bodies — we are talking about the NBU, NABU and NAZK.

By the end of September, it is necessary to identify the state-owned companies most affected by the war and assess fiscal and quasi-fiscal risks, as well as complete an external audit of NABUʼs effectiveness with the participation of three independent experts with international experience and publish its report.

By the end of October, Ukraine is expected to diagnose the process of preparing a medium-term budget to strengthen the strategic approach to the budget and develop a policy of state ownership of state-owned enterprises, a dividend policy and a privatization strategy (previously, the deadline for this was August 2024).

And by the end of December 2024, it is necessary to prepare the principles for the recovery of banks and adopt a Cabinet resolution with an action plan and timeline, which will establish a clear connection between medium-term budget planning and capital expenditures, as well as determine the Ministry of Finance responsible for supervision.

Aid from the IMF

The IMF approved the four-year extended financing program for Ukraine (The Extended Fund Facility) in the amount of $15.6 billion in March 2023. The program is included in the general package of support to Ukraine by international partners in the amount of $115 billion.

The program was coordinated with the European Union, the United States and other countries of the "Big Seven", which promised financial support to help Ukraine cover the budget deficit.

• On March 21, 2024 , the IMF approved the fourth tranche for Ukraine for $880 million. Ukraine met all of the IMFʼs structural beacons and indicative targets, as well as all but one of the quantitative performance criteria. The National Bank of Ukraine clarified that "it is a matter of minor non-compliance with the lower limit of tax revenues, which is connected with the blocking of borders."