June 28, 2024
PRESS OFFICER: Camila Perez
Phone: +1 202 623-7100Email: MEDIA@IMF.org
Washington, DC: The Executive Board of the International Monetary Fund (IMF) today completed the Fourth Review of the EFF arrangement for Ukraine, enabling the authorities to immediately draw US$2.2 billion (SDR 1.66 billion), which will be channeled for budget support. This will bring the total disbursements under the IMF-supported program to about $7.6 billion.
Ukraine’s 48-month EFF arrangement, with access of SDR 11.6 billion (equivalent to US$15.6 billion, or about 577 percent of quota), was approved on March 31, 2023, and forms part of a US$122 billion support package for Ukraine. The authorities’ IMF-supported program aims to anchor policies that sustain fiscal, external, price and financial stability at a time of exceptionally high uncertainty, supports the economic recovery, enhances governance and strengthens institutions to promote long-term growth in the context of reconstruction and Ukraine’s path to EU accession.
All quantitative performance criteria and all but one indicative targets for end-March were met; the one indicative target was missed by a small margin. Structural benchmarks through end-June were implemented on time or with a short delay, underscoring the authorities’ continuing commitment to an ambitious reform agenda.
The economy was more resilient than expected in the first quarter of 2024, with robust growth outturns, continued disinflation, and the maintenance of adequate reserves. However, the outlook for the remainder of the year and into 2025 has worsened since the Third Review, largely due to devastating attacks on Ukrainian energy infrastructure and uncertainty about the length of Russia’s war against Ukraine; overall, the outlook remains subject to exceptionally high uncertainty.
Following the Executive Board discussion on Ukraine, Ms. Kristalina Georgieva, Managing Director of the IMF, issued the following statement[1]:
“Russia’s invasion of Ukraine continues to have a devastating social and economic impact on Ukraine. Despite the war, macroeconomic and financial stability has been preserved through skillful policymaking by the Ukrainian authorities as well as substantial external support. The economy remains resilient, reflecting the continued adaptability of households and firms.
Ukraine’s performance and commitment under the program continues to be strong. All quantitative performance criteria and all structural benchmarks for end-June met on time or implemented with a short delay. The program remains fully financed with an external financing envelope of US$122 billion in the baseline and US$141 billion in the downside over the 4-year program period.
Looking ahead, the recovery is expected to slow particularly given the attacks on Ukraine’s energy infrastructure, and the outlook is subject to high risks from the exceptionally high war-related uncertainty. Vigilance against these risks is necessary to enable timely responses if shocks materialize.
Timely and predictable external disbursements together with strong domestic resource mobilization and careful liquidity management are necessary for Ukraine to meet its financing needs. Fiscal policies for the remainder of 2024, together with preparation for the 2025 budget, should be underpinned by steadfast revenue mobilization efforts aligned with the National Revenue Strategy. In this regard, measures that erode the tax base should be avoided and tax and customs administration together with the Economic Security Bureau of Ukraine (ESBU) strengthened. Further strengthening medium-term budgeting, fiscal risks and transparency, and public investment management should advance in support of these goals. An external commercial debt treatment in line with the debt sustainability objectives under the program will be necessary to create the needed space for critical spending and restore debt sustainability in line with the authorities’ strategy.
Continued exchange rate flexibility under the managed exchange rate regime will help strengthen the resilience of the economy to external shocks. Moreover, continued disinflation combined with well-anchored inflation expectations and FX cash market stability suggest scope for further monetary policy easing. A state-dependent and gradual approach to the easing of FX controls remains essential to safeguard FX reserves. The authorities’ efforts to avoid monetary financing should continue.
The financial sector remains stable, and efforts should continue to strengthen bank resolution and supervision, governance, and contingency planning.
Steadfast reforms to enhance anti-corruption and governance frameworks, including ensuring the effectiveness of anticorruption institutions, remain essential to contain fiscal risks, secure donor confidence, enhance growth, and support the path to EU accession.”
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Table 1. Ukraine: Selected Economic and Social Indicators, 2021–27 |
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2021 |
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2022 |
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2023 |
2024 |
2025 |
2026 |
2027 |
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Act. |
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Act. |
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Act. |
Proj. |
Proj. |
Proj. |
Proj. |
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Real economy (percent change, unless otherwise indicated) |
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Nominal GDP (billions of Ukrainian hryvnias) 1/ |
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5,451 |
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5,239 |
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6,538 |
7,485 |
8,744 |
9,718 |
10,664 |
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Real GDP 1/ |
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3.4 |
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-28.8 |
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5.3 |
2.5-3.5 |
5.5 |
5.3 |
4.5 |
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Contributions: |
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Domestic demand |
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12.9 |
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-22.9 |
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13.9 |
5.8 |
6.1 |
7.4 |
7.1 |
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Private consumption |
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4.7 |
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-16.8 |
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5.5 |
3.7 |
4.1 |
4.9 |
4.7 |
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Public consumption |
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0.1 |
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12.5 |
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2.6 |
-0.9 |
-1.8 |
-0.6 |
-0.1 |
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Investment |
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8.1 |
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-18.6 |
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5.8 |
3.0 |
3.8 |
3.0 |
2.5 |
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Net exports |
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-9.5 |
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-5.9 |
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-8.6 |
-3.3 |
-0.6 |
-2.0 |
-2.6 |
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GDP deflator |
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24.8 |
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34.9 |
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18.5 |
11.7 |
10.7 |
5.5 |
5.0 |
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Unemployment rate (ILO definition; period average, percent) |
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9.8 |
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24.5 |
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19.1 |
14.8 |
14.3 |
11.7 |
10.4 |
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Consumer prices (period average) |
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9.4 |
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20.2 |
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12.9 |
5.2 |
8.3 |
6.2 |
5.2 |
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Consumer prices (end of period) |
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10.0 |
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26.6 |
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5.1 |
8.0 |
7.0 |
5.5 |
5.0 |
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Nominal wages (average) |
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20.8 |
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1.0 |
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20.1 |
14.3 |
15.7 |
14.5 |
10.5 |
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Real wages (average) |
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10.5 |
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-16.0 |
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6.4 |
8.6 |
6.8 |
7.8 |
5.0 |
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Savings (percent of GDP) |
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12.5 |
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17.0 |
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10.0 |
10.9 |
9.2 |
13.4 |
16.0 |
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Private |
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12.7 |
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30.2 |
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24.8 |
22.8 |
14.4 |
13.8 |
14.7 |
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Public |
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-0.2 |
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-13.1 |
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-14.8 |
-11.9 |
-5.2 |
-0.4 |
1.3 |
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Investment (percent of GDP) |
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14.5 |
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12.1 |
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15.1 |
16.7 |
16.1 |
19.9 |
21.0 |
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Private |
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10.7 |
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9.6 |
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10.4 |
14.3 |
13.8 |
15.5 |
16.0 |
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Public |
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3.8 |
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2.5 |
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4.8 |
2.4 |
2.3 |
4.5 |
4.9 |
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General Government (percent of GDP) |
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Fiscal balance 2/ |
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-4.0 |
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-15.6 |
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-19.6 |
-14.2 |
-7.5 |
-4.9 |
-3.6 |
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Fiscal balance, excl. grants 2/ |
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-4.0 |
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-24.8 |
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-26.1 |
-20.9 |
-10.4 |
-6.2 |
-4.8 |
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External financing (net) |
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2.4 |
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10.7 |
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16.5 |
12.1 |
6.5 |
3.8 |
-0.1 |
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Domestic financing (net), of which: |
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1.6 |
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5.0 |
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3.1 |
2.1 |
0.9 |
1.1 |
3.7 |
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NBU |
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-0.3 |
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7.3 |
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-0.2 |
-0.2 |
-0.1 |
-0.1 |
-0.1 |
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Commercial banks |
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1.5 |
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-1.5 |
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2.5 |
2.1 |
0.5 |
1.1 |
3.2 |
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Public and publicly-guaranteed debt |
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50.5 |
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77.7 |
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82.3 |
97.3 |
97.7 |
96.8 |
94.5 |
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Money and credit (end of period, percent change) |
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Base money |
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11.2 |
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19.6 |
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23.3 |
13.8 |
17.9 |
11.9 |
9.0 |
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Broad money |
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12.0 |
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20.8 |
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23.0 |
13.9 |
15.8 |
12.0 |
10.6 |
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Credit to nongovernment |
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8.4 |
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-3.1 |
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-0.5 |
8.0 |
17.7 |
18.2 |
13.4 |
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Balance of payments (percent of GDP) |
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Current account balance |
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-1.9 |
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4.9 |
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-5.2 |
-5.8 |
-6.9 |
-6.6 |
-4.9 |
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Foreign direct investment |
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3.8 |
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0.1 |
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2.4 |
2.1 |
2.6 |
5.0 |
5.1 |
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Gross reserves (end of period, billions of U.S. dollars) |
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30.9 |
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28.5 |
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40.5 |
41.8 |
43.0 |
48.0 |
47.4 |
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Months of next year's imports of goods and services |
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4.5 |
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3.9 |
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5.3 |
5.5 |
5.4 |
5.7 |
5.4 |
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Percent of short-term debt (remaining maturity) |
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67.5 |
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64.3 |
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87.3 |
97.9 |
94.2 |
109.2 |
103.1 |
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Percent of the IMF composite metric (float) |
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104.4 |
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103.6 |
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124.2 |
113.7 |
110.3 |
114.7 |
111.2 |
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Goods exports (annual volume change in percent) |
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35.0 |
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-44.4 |
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-15.6 |
18.5 |
4.6 |
12.7 |
7.0 |
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Goods imports (annual volume change in percent) |
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17.0 |
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-23.9 |
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21.6 |
8.9 |
7.5 |
10.9 |
10.8 |
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Goods terms of trade (percent change) |
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-8.4 |
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-11.6 |
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3.6 |
0.3 |
-1.4 |
1.2 |
0.9 |
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Exchange rate |
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Hryvnia per U.S. dollar (end of period) |
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27.3 |
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36.6 |
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38.0 |
… |
… |
… |
… |
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Hryvnia per U.S. dollar (period average) |
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27.3 |
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32.3 |
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36.7 |
… |
… |
… |
… |
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Real effective rate (deflator-based, percent change) |
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10.3 |
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28.2 |
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-1.5 |
… |
… |
… |
… |
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Memorandum items: |
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Per capita GDP / Population (2017): US$2,640 / 44.8 million |
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Literacy / Poverty rate (2022 est 3/): 100 percent / 25 percent |
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Sources: Ukrainian authorities; World Bank, World Development Indicators; and IMF staff estimates. |
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1/ GDP is compiled as per SNA 2008 and excludes territories that are or were in direct combat zones and temporarily occupied by Russia (consistent with the TMU). |
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2/ The general government includes the central and local governments and the social funds. |
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3/ Based on World Bank estimates. |
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[1] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summing up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.
