IMF, Ukraine reach economic policy monitoring arrangement

The International Monetary Fund said on Wednesday it has reached a staff-level agreement with Ukraine for a policy program monitoring arrangement that aims to pave the way towards a new, full-fledged IMF loan program for Kyiv.

The IMF said the Program Monitoring with Board Involvement (PMB) arrangement, which is subject to executive board approval in the coming weeks, “will help provide an anchor for macroeconomic policies and catalyze donor support.”

Ukraine earlier this year had requested a new IMF loan program of some $15 billion to $20 billion, but the Fund’s debt sustainability requirements have so far prohibited a program of that size for the country as it battles Russia’s invasion and suffers intense missile attacks on its energy infrastructure.

Instead, the IMF in early October approved $1.3 billion in emergency financing under a new facility to address food shortages and price spikes caused by the war in Ukraine.

At the same time, the Fund launched discussions with Kyiv over economic policies that could lay a foundation for a larger loan program that culminated in a virtual mission from Nov. 11-22.

The IMF said the resulting staff-level PMB agreement calls for Ukraine to implement policies and measures to boost tax revenues, revive the domestic bond market and contain monetary financing to limit inflation. The PMB also is expected to contribute to the long-term stability of the financial sector and enhance governance and transparency, the Fund added.