Statement by IMF Managing Director Christine Lagarde on Ukraine

Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), issued the following statement today in Berlin, Germany:

“I am pleased to announce that the IMF Executive Board today approved an Extended Arrangement under the Extended Fund Facility (EFF) of SDR 12.348 billion (about $17.5 billion, €15.5 billion) for Ukraine, based on a comprehensive economic reform program supported by the Fund as well as by additional resources from the international community. Building on the actions taken under the earlier stand-by arrangement, this new four-year extended arrangement will support immediate economic stabilization in Ukraine and a set of deep and wide-ranging policy reforms aimed at restoring robust growth over the medium term and improving living standards for the Ukrainian people.

“The change in the IMF-supported program from Stand-By Arrangement to Extended Arrangement under the EFF, which is consistent with the more protracted nature of Ukraine’s balance-of-payment needs, will provide more funding, more time, more flexibility, and better financing terms for Ukraine. Other bilateral and multilateral financing is also being made available to support the reforms. In addition, the Ukrainian government has taken actions toward consultations with the holders of their public sector debt with a view to improving medium-term sustainability.

“The Ukrainian authorities continue to demonstrate a strong commitment to reform. They have maintained fiscal discipline in very difficult conditions; allowed the exchange rate to adjust; and have increased retail end-user prices for gas. Many key measures are front-loaded under the new program—including further sizable energy tariff increases; bank restructuring; governance reforms of state-owned enterprises; and legal changes aimed at combating corruption and strengthening the rule of law.

“To help cushion the impact of adjustment, especially for the poorest groups, measures are being taken to strengthen and better target the social safety net.”

“The program is ambitious and involves risks, notably those stemming from the conflict in the east of the country. I am heartened that the cease-fire agreed last month in Minsk seems to be largely holding for now, and hope that a further loss of life can be avoided.

“I wish the authorities well as they embark on this new economic reform program. With continued firm implementation, there is reasonably strong prospect of success.”