News Brief No. 00/53

News Brief: Release of PricewaterhouseCoopers Report on the National Bank of Ukraine

July 10, 2000

1. The National Bank of Ukraine (NBU) has released the second of three reports from a special examination by PricewaterhouseCoopers (PwC) of the NBU's foreign reserves management. It covers the period November 30, 1996 to July 31, 1997; the first report covered August 1, 1997 to January 31, 1998 and the third report will cover February 1, 1998 to September 30, 1998. The NBU commissioned the report at the request of the IMF staff following various reports that the NBU carried out a number of transactions that gave the impression that Ukraine's foreign exchange reserves were higher than was actually the case. The IMF has posted the PwC report on its website at www.imf.org where it will remain for one month, as did the first report (see IMF News Brief No. 00/26 of May 4, 2000). At the requirement of PwC, the report is available in a read-only version.

2. The second PwC report discloses no transactions adversely affecting reserve levels other than the transactions detailed in the first report, and is consistent with the IMF staff's understanding of Ukraine's use of its foreign exchange reserves described in the News Briefs of March 14, 2000 and May 4, 2000 (IMF News Brief No. 00/15 and IMF News Brief No. 00/26).

3. The IMF views very seriously any misreporting arising from overstating the level of reserves. The IMF's Executive Board in the next few weeks will decide whether Ukraine, by misreporting the level of its reserves in the periods covered by the first two PwC reports, breached its obligation to provide the Fund with accurate information under the Fund's Articles of Agreement or obtained disbursements under an IMF arrangement that it would not otherwise have received. Once a final determination on misreporting is made, the Executive Board will decide what remedial actions may be appropriate.

4. The third stage of the PwC special examination, which is not expected to raise additional issues, will be completed in August 2000 and it will also be published.