Ukraine hopes to get $1.8 billion from IMF in two more tranches in 2023

By Olena Harmash

KYIV (Reuters) – Ukraine hopes to receive two more tranches worth $1.8 billion from the International Monetary Fund this year under its newly-approved four-year lending program, top Ukrainian central bank officials said on Tuesday.

Ukraine this week received the first $2.7 billion tranche under the program, which is a part of a bigger $115 billion global package of support.

“We hope to receive all planned tranches this year with an overall amount of $4.6 billion. It includes two more tranches worth $0.9 billion each,” said Serhiy Nikolaichuk, one of the central bank’s deputy governors.

Ukraine faces an unprecedented budget deficit this year and is relying heavily on Western financial support. The Finance Ministry said it had already received a total of $12.6 billion in foreign aid so far this year.

Andriy Pyshnyi, the central bank’s governor, hailed the $15.6 billion IMF program and the bigger global support package as a sign that Ukraine’s economy continued to demonstrate “resilience and ability” after 13 months of war with Russia.

“The (IMF) memorandum defines what Ukraine needs in order to strengthen our capacity on our way to the victory,” Pyshnyi said. “The $115 billion package should help reduce uncertainty.”

Ukraine must meet certain conditions to ensure the IMF financing, including steps to boost tax revenue, maintain exchange rate stability, preserve central bank independence and strengthen anti-corruption efforts.

Pyshnyi said the central bank was strongly committed to meeting its obligations under the program. “The 2023 and 2024 will be the years to assess the banking system stance, these will be years of the diagnostics,” he said. “We will conduct banks’ diagnostics by ourselves in 2023. We will start in a few weeks.”

The next phase would include work with independent consultants and was likely to begin in 2024, he said.

The Ukrainian economy has performed better than expected so far this year. Nikolaichuk said the central bank was likely to revise up its forecast for gross domestic product growth for 2023 from the 0.3% projection unveiled in January.

“I can see that the situation is considerably better than we had forecast in January. It is related to a much more resilient energy sector. We had more conservative estimates,” Nikolaichuk said.

The central bank said business sentiment had improved now that winter had ended and energy blackouts had been avoided.

Ukraine’s energy sector survived months of Russian attacks, but fast repairs and imports of Western equipment have enabled the country to generate enough electricity to cover its needs.

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