Press Release No. 07/119

Press Release: Statement by IMF First Deputy Managing Director John Lipsky at the Conclusion of his Visit to Ukraine

June 5, 2007

Mr. John Lipsky, First Deputy Managing Director of the International Monetary Fund (IMF), made the following statement today in Kiev:

"This is my first visit to Ukraine and I would like to thank the Ukrainian authorities for their hospitality. I have had productive discussions with President Yushchenko, First Deputy Prime Minister Azarov, Chairman of Verkhovna Rada Moroz, Governor Stelmakh and other high officials about Ukraine's recent economic performance and prospects.

"I am impressed by the consensus that exists in Ukraine on the need to further integrate Ukraine's economy into international goods and financial markets. To this end the authorities have already achieved much, including a host of legislation aimed at removing barriers to trade, and this-in accordance with the Government's expectations-could pave the way soon for WTO accession.

"Further global integration brings the opportunity to bring Ukraine's per capita income closer to levels in the more advanced transition economies. At the same time it creates risks to be managed. For instance, capital flows could prove volatile. Realizing these opportunities and avoiding the risks will, in my view, require a coordinated macroeconomic strategy.

"The government has already embraced the key building blocks for this strategy, which now need to be implemented. These include (i) measures to improve Ukraine's investment climate; (ii) a prudent fiscal stance in 2007-08, built on a moderation of wage and social transfer growth; (iii) the implementation of a new monetary framework to target low and stable inflation; and (iv) careful regulation and supervision of the financial sector to ensure risks are appropriately minimized.

"With the right policy frameworks and policies in place, I am confident that Ukraine's outlook will remain favorable for years to come."