Ukraine: Fourth Review of the Extended Arrangement under the Extended Fund Facility, Request for Modifications of a Performance Criterion, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Ukraine

UKRAINE IMFCountryReportNo.24/199 June2024 FOURTHREVIEWOFTHEEXTENDEDARRANGEMENTUNDERTHEEXTENDEDFUNDFACILITY,REQUESTFORMODIFICATIONOFAPERFORMANCECRITERION,ANDFINANCINGASSURANCESREVIEW—PRESSRELEASE;STAFFREPORT;ANDSTATEMENTBYTHEEXECUTIVEDIRECTORFORUKRAINE InthecontextoftheFourthReviewoftheExtendedArrangementUndertheExtendedFundFacility,RequestforModificationofPerformanceCriterion,andFinancingAssurancesReview,thefollowingdocumentshavebeenreleasedandareincludedinthispackage: APressReleaseincludingastatementbytheChairoftheExecutiveBoard. TheStaffReportpreparedbyastaffteamoftheIMFfortheExecutiveBoard’sconsiderationonJune28,2024,followingdiscussionsthatendedonMay31,2024,withtheofficialsofUkraineoneconomicdevelopmentsandpolicies.Basedoninformationavailableatthetimeofthesediscussions,thestaffreportwascompletedonJune18,2024. AStaffStatementupdatinginformationonrecentdevelopments. AStatementbytheExecutiveDirectorforUkraine. TheIMF’stransparencypolicyallowsforthedeletionofmarket-sensitiveinformationandprematuredisclosureoftheauthorities’policyintentionsinpublishedstaffreportsandotherdocuments. Copiesofthisreportareavailabletothepublicfrom InternationalMonetaryFundPublicationServicesPOBox92780Washington,D.C.20090Telephone:(202)623-7430Fax:(202)623-7201 E-mail:publications@imf.orgWeb:http://www.imf.org InternationalMonetaryFundWashington,D.C. ©2024InternationalMonetaryFund PR24/252 IMFExecutiveBoardCompletestheFourthReviewoftheExtendedFundFacilityArrangementforUkraine FORIMMEDIATERELEASE TheIMFBoardtodaycompletedtheFourthReviewoftheextendedarrangementundertheExtendedFundFacility(EFF)forUkraine,enablingadisbursementofaboutUS$2.2billion(SDR1.66billion)toUkraine,whichwillbechanneledforbudgetsupport. Ukraine’sperformanceremainsstrongundertheEFFdespitechallengingconditions.Allquantitativeperformancecriteriaforend-Marchweremet,andallstructuralbenchmarksthroughend-Junewereimplementedontimeorwithashortdelay. TheUkrainianeconomycontinuestoberesilientalthoughtheoutlookremainssubjecttoexceptionallyhighuncertainty.Sustainedreformmomentumandtimelydisbursementofexternalsupportarenecessarytosafeguardmacroeconomicstability,restorefiscalanddebtsustainability,andenhanceinstitutionalreformstolaythepathtoEuropeanUnionaccession. Washington,DC–June28,2024:TheExecutiveBoardoftheInternationalMonetaryFund(IMF)todaycompletedtheFourthReviewoftheEFFarrangementforUkraine,enablingtheauthoritiestoimmediatelydrawUS$2.2billion(SDR1.66billion),whichwillbechanneledforbudgetsupport.ThiswillbringthetotaldisbursementsundertheIMF-supportedprogramtoabout$7.6billion. Ukraine’s48-monthEFFarrangement,withaccessofSDR11.6billion(equivalenttoUS$15.6billion,orabout577percentofquota),wasapprovedonMarch31,2023,andformspartofaUS$122billionsupportpackageforUkraine.Theauthorities’IMF-supportedprogramaimstoanchorpoliciesthatsustainfiscal,external,priceandfinancialstabilityatatimeofexceptionallyhighuncertainty,supportstheeconomicrecovery,enhancesgovernanceandstrengthensinstitutionstopromotelong-termgrowthinthecontextofreconstructionandUkraine’spathtoEUaccession. Allquantitativeperformancecriteriaandallbutoneindicativetargetsforend-Marchweremet;theoneindicativetargetwasmissedbyasmallmargin.Structuralbenchmarksthroughend-Junewereimplementedontimeorwithashortdelay,underscoringtheauthorities’continuingcommitmenttoanambitiousreformagenda. Theeconomywasmoreresilientthanexpectedinthefirstquarterof2024,withrobustgrowthoutturns,continueddisinflation,andthemaintenanceofadequatereserves.However,theoutlookfortheremainderoftheyearandinto2025hasworsenedsincetheThirdReview,largelyduetodevastatingattacksonUkrainianenergyinfrastructureanduncertaintyaboutthelengthofRussia’swaragainstUkraine;overall,theoutlookremainssubjecttoexceptionallyhighuncertainty. 2 FollowingtheExecutiveBoarddiscussiononUkraine,Ms.KristalinaGeorgieva,ManagingDirectoroftheIMF,issuedthefollowingstatement1: “Russia’sinvasionofUkrainecontinuestohaveadevastatingsocialandeconomicimpactonUkraine.Despitethewar,macroeconomicandfinancialstabilityhasbeenpreservedthroughskillfulpolicymakingbytheUkrainianauthoritiesaswellassubstantialexternalsupport.Theeconomyremainsresilient,reflectingthecontinuedadaptabilityofhouseholdsandfirms. Ukraine’sperformanceandcommitmentundertheprogramcontinuestobestrong.Allquantitativeperformancecriteriaandallstructuralbenchmarksforend-Junemetontimeorimplementedwithashortdelay.TheprogramremainsfullyfinancedwithanexternalfinancingenvelopeofUS$122billioninthebaselineandUS$141billioninthedownsideoverthe4-yearprogramperiod. Lookingahead,therecoveryisexpectedtoslowparticularlygiventheattacksonUkraine’senergyinfrastructure,andtheoutlookissubjecttohighrisksfromtheexceptionallyhighwar-relateduncertainty.Vigilanceagainsttheserisksisnecessarytoenabletimelyresponsesifshocksmaterialize. TimelyandpredictableexternaldisbursementstogetherwithstrongdomesticresourcemobilizationandcarefulliquiditymanagementarenecessaryforUkrainetomeetitsfinancingneeds.Fiscalpoliciesfortheremainderof2024,togetherwithpreparati