ua en ru

Currency restriction relief and dynamic dollar rate: Key points in IMF negotiations

Currency restriction relief and dynamic dollar rate: Key points in IMF negotiations Photo: The dollar exchange rate will be discussed during the work of the IMF mission (Getty Images)

The mission of the International Monetary Fund (IMF) in Ukraine started work for the second review of the Extended Fund Facility program on November 6. The state of Ukraine's fulfillment of its obligations under the Memorandum of Economic & Financial Policies will be discussed, the press service of the National Bank of Ukraine reports.

As the press service noted, during the second review of the EFF program, it is, in particular, about measures in the areas of fiscal and budgetary, monetary and currency policy, ensuring financial stability, as well as structural reforms for medium and long-term economic growth.

"The focus of the meetings, in particular, will be the situation in the country's financial sector, the results of the assessment of the stability of the banking sector, the implementation of the Strategy for easing currency restrictions, the transition to greater exchange rate flexibility and the return to inflation targeting. The results of the transition to the regime of managed exchange rate flexibility and the implementation of risk-oriented supervision in the financial sector," the message reads.

In addition, experts will focus on the issue of sources of financing the deficit of the state budget of Ukraine, including international financial assistance and the domestic debt market, the NBU added.

"We are aware of the critical need to maintain the IMF's support not only for the further financing of budget needs but also in general for the development of our country and its European future," said NBU Chairman Andriy Pyshnyy.

The mission of the IMF

We would like to remind you that the Mission of the International Monetary Fund (IMF) in Ukraine started its work on November 6.

The mission will work in a hybrid format - offline and online. The Ukrainian team, which will participate in the working meetings directly in Warsaw and remotely from Kyiv, will include representatives of the National Bank of Ukraine, the Ministry of Finance, and other state bodies and institutions.

Last week, Prime Minister Denys Shmyhal said that the IMF is preparing a mission for the second review of the extended financing program, which will allow attracting the next tranche of the loan for approximately 900 million dollars.

IMF program

On March 31, the IMF approved a four-year program of expanded financing for Ukraine for 15.6 billion dollars. The program is part of a package of international support with a total cost of 115 billion dollars. At the same time, the authorities of Ukraine must implement 19 structural beacons to continue funding.

As part of the program, the IMF allocated the first tranche of $2.7 billion in April. Another tranche of 890 million dollars was allocated in June. The next one is expected in the fall after the second review of the program by the IMF mission.

Managed rate flexibility

We will remind you that on October 3, the National Bank (NBU) introduced a regime of managed flexibility of the exchange rate.

As NBU Chairman Andriy Pyshnyy stated, the new policy does not mean that the hryvnia will constantly fall, and the term "controlled exchange rate flexibility" does not equal "permanent devaluation."

According to him, for the exchange rate to move in both directions, the NBU will cover the structural deficit of the currency on the market, and any fluctuations in the exchange rate, either in the direction of hryvnia weakening or strengthening, will be significantly limited.