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2.0 Politics
2.1 IMF agrees new deal, sends the money
The IMF executive board approved on June 9 a 18-month Stand-by Arrangement program for Ukraine with access to SDR 3.6bn in financing ($5.5bn), the fund reported the same day.
The first tranche under the program will amount to SDR 1.5bn ($2.1bn). The new SBA “will provide an anchor for the authorities’ efforts to address the impact of the crisis, while ensuring macroeconomic stability and safeguarding achievements to date,” said Kristalina Georgieva, the IMF’s managing director.
The new arrangement will focus on four priorities, the IMF press release said. They are mitigating the economic impact of the crisis, ensuring continued central bank independence and a flexible exchange rate, safeguarding financial stability while recovering the costs from bank resolutions, and moving forward with key governance and anti-corruption measures.
The IMF deal comes with conditions: retaining foreign exchange rate flexibility, linking household gas prices to regional prices after August, passing legislation to establish the ultimate beneficiary owners of land, and keeping to this year’s inflation target of 5%. Last month, prices were up 1.7% y/y.
Georgieva warned that uncertainty about the direction of economic policies in Ukraine “remains substantial.”
Also, the IMF has presented its updated macro forecast for Ukraine, now seeing a 8.2% plunge in real GDP in 2020 (vs. a 7.7% decline in its April forecast), which will be followed by tiny 1.1% growth in 2021 (down from 3.6% expected in April) and 3.0% growth in 2022.
6 UKRAINE Country Report July 2020 www.intellinews.com
