Ukraine, IMF reach staff level agreement on new Stand-By Arrangement
The International Monetary Fund staff and the Ukrainian authorities have reached agreement on economic policies for a new 14-month Stand-By Arrangement (SBA).
The new SBA will replace the arrangement under the Extended Fund Facility (EFF), approved in March 2015 and set to expire in March 2019, according to a press release by an IMF press service.
"The new SBA, with a requested access of SDR 2.8 billion (equivalent to US$3.9 billion), will provide an anchor for the authorities’ economic policies during 2019," reads the release. "Building on progress made under the EFF arrangement in reducing macro-economic vulnerabilities, it will focus in particular on continuing with fiscal consolidation and reducing inflation, as well as reforms to strengthen tax administration, the financial sector and the energy sector."
The IMF also says the agreement reached on Friday, October 19, reflects the IMF’s commitment to continue to "help Ukraine achieve stronger, sustainable, and inclusive economic growth."
The new program has been developed in close coordination with the World Bank and the European Union, who have parallel operations to support Ukraine, according to the IMF press service.
The Fund notes that the Ukrainian authorities' "steadfast and effective implementation will be critical for the program to achieve its objectives."
The agreement is yet to be approved by the IMF management and the IMF Executive Board.
Board consideration is expected later in the year following parliamentary approval of a government budget for 2019 consistent with IMF staff recommendations and an increase in household gas and heating tariffs to reflect market developments while continuing to protect low-income households.
As UNIAN reported earlier, the Verkhovna Rada, Ukraine's parliament, on Oct 18 passed in the first reading the bill related to the draft national budget of Ukraine for 2019.
The relevant document (Resolution No. 9000-P) was backed by 240 MPs with the required minimum of 226 votes.
The Cabinet of Ministers of Ukraine at its extraordinary meeting on Friday, Oct 19, made a decision to raise the price of natural gas for the Ukrainian households by 23.5%, to UAH 8,550 per 1,000 cubic meters from November 1, that's according to PM Volodymyr Groysman.
The issue of gas prices for households was the subject of talks between Ukraine and the IMF. The IMF insisted that gas prices on the domestic market be adjusted (raised) to achieve parity with the price of imported gas. At the moment, bringing the prices to import parity corresponds to a 30% increase.