30 years of cooperation with the International Monetary Fund
On September 3, Ukraine celebrates the 30th anniversary of its membership of the International Monetary Fund. Since 1992, the IMF has consistently supported Ukraine to ensure sustainable development and a sustainable response to challenges.
Approximately $37 billion in financial support under 13 cooperation programs and the implementation of numerous structural reforms in the areas of monetary and fiscal policy, banking, judicial and fiscal policy, customs, public administration, anti-corruption, land market and medicine – these are the results of long-term coordinated cooperation of Ukraine with the Fund.
During the first 20 years of the partnership, Ukraine received approximately $18.26 billion in financial assistance to reduce the balance of payments deficit, support the national currency exchange rate and replenish foreign exchange reserves . The foundations for a sound financial system in the country have been laid.
After 2014, the start of Russia’s war against Ukraine and the conscious choice of Ukrainians to stand with the civilized world, cooperation with the IMF reached a new level. The Fund has shown leadership in supporting the people of Ukraine and has become a stabilizing factor, preventing the country’s financial system from collapsing.
During each crisis in Ukraine, the IMF has supported us. When the global financial crisis shook the world in 2008, the Fund extended a then-record loan to Ukraine of $10.6 billion (SDR 7 billion). After the occupation of Crimea and the start of the war in the east of the country, Ukraine received two tranches for a total amount of 4.6 billion dollars (2.97 billion SDR). Subsequently, they approved the Expanded Financing Facility, under which $8.7 billion (SDR 6.15 billion) was received. Under this program, Ukraine received the maximum number of tranches – four, and the first tranche was the largest ever, amounting to about $5 billion (SDR 3.55 billion) .
Today, as Ukraine fights for democratic values, freedom of choice and the right to live on its land, the Fund once again demonstrates its unwavering support for Ukrainians. In March, the Fund’s Executive Directors voted to endow our country with funds under the $1.4 billion Rapid Financing Instrument. Financial aid was an important contribution to mitigating the economic consequences of the invasion.
6 months of war, -35% of expected GDP, more than 6 million refugees abroad, destroyed infrastructure and businesses – Ukraine’s financial system continues to function fully. This became possible thanks to the solid foundation of financial policy and state institutions. In particular, thanks to the financial support of the IMF combined with the implementation of structural reforms in close cooperation over the past years.
Since 2015, a number of financial sector reform measures have been implemented with IMF support. These measures made it possible to cope with the consequences of the 2014 crisis and to maintain macro-financial stability during a large-scale war. The financial sector has been cleaned of unsustainable and non-transparent institutions, mechanisms have been put in place to settle problematic debts, protect the rights of investors and consumers, and the system of taxation of financial sector instruments has been harmonized.
In addition, capital market reform with the support of the Fund has created a competitive public capital market in Ukraine. Before the start of a full-scale war, government bonds enjoyed considerable interest from foreign investors. During the war, thanks to the sale of military bonds, it was possible to attract more than 4 billion dollars into the state budget.
However, cooperation with the IMF is not only about supporting the financial system and reforms. It is also a matter of trust in the state. The most influential domestic and international investors focus on the expert opinion of the IMF and their assessment of the state of the economy. The Fund’s financial assistance in March 2022 had a significant impact on raising funds from other partners.
30 years of partnership have been marked by effective cooperation and have become an important driver of positive changes in the country.
Ukraine has a long road to recovery ahead of it, and we hope the IMF will continue to play an important role in building a sustainable future for Ukraine.
We are grateful to the International Monetary Fund for the many years of unwavering cooperation and support during this historic time for our country.
Cooperation of Ukraine with the IMF in the implementation of joint programs of economic development in Ukraine began in October 1994. 13 joint programs of cooperation with the IMF have been launched in 30 years of membership:
- Systemic Transformation Facility 1994. Financial assistance in the amount of SDR 498 million (USD 763 million) was provided to Ukraine to support Ukraine’s fiscal balance.
- Stand-by Agreement 1995, Stand-by Agreement 1996, Stand-by Agreement 1997. Ukraine received loans totaling SDR 1.32 billion (USD 1.9 billion) under three annual programs. The main purpose of these loans was to support the exchange rate of the national currency and to finance the deficit of the budget balance of Ukraine.
- Extended Credit Facility (EFF) 1998. Ukraine received 1.19 billion SDRs (1.6 billion USD), intended to replenish the foreign exchange reserves of the National Bank of Ukraine.
- Stand-by agreement 2004. In 2004, the launch of the program made it possible to benefit from an IMF loan in the amount of 411.6 million SDR (600 million USD). The program was canceled in March 2005 due to numerous implementation risks, and funds were not received.
- Stand-by arrangement 2008. Ukraine received three tranches totaling SDR 7 billion (USD 10.6 billion). Part of the second tranche in the amount of 1 billion SDR (1.5 billion USD) and the third tranche in the amount of 2.1 billion SDR (approximately 3.3 billion USD) been allocated entirely to the Ukrainian state budget.
- Stand-By Agreement 2010. Ukraine received two tranches totaling SDR 2.25 billion (US$3.4 billion), of which SDR 1.3 billion (US$2 billion) were allocated to the state budget.
- Stand-By Agreement 2014. Ukraine received two tranches totaling SDR 2.97 billion (US$4.6 billion), of which SDR 1.9 billion (US$3 billion) was allocated to the state budget.
- Extended Credit Facility (EFF) 2015. Ukraine received the first loan tranche in the amount of SDR 3.55 billion (about $5 billion), of which SDR 1.9 billion (2.7 billion dollars) were allocated to the state budget. The second, third and fourth tranches, totaling SDR 2.6 billion (about US$3.7 billion), were intended to support international reserves.
- Stand-By Agreement 2018. Ukraine received a tranche in the amount of SDR 1 billion (approximately US$1.4 billion), which was used to support international reserves.
- Stand-By Agreement 2020. The program focused on maintaining macroeconomic and financial stability and covered areas such as fiscal policy, monetary policy, financial sector policy, energy policy, and anti-corruption policy. Ukraine received two tranches totaling SDR 2 billion ($2.8 billion).
- Rapid Financing Instrument (RFI) 2022. On March 9, 2022, due to Russia’s military aggression against Ukraine, IMF Executive Directors decided to provide Ukraine with funds under the Rapid Financing Instrument. rapid financing based on the results of the review of Ukraine’s request in the amount of SDR 1 billion (US$1.4 billion).