Economy

IMF closes mission on Ukraine and urges the authorities to not erode tax revenues. Stocksak


© Stocksak. As Russia’s attack continues on Ukraine, local residents stand in front of firewood that was delivered by the local administration to heat homes. This is Derhachi, Kharkiv Region, Ukraine, October 20, 2022. REUTERS/Vyacheslav madiyevskyy

By Andrea Shalal

WASHINGTON, (Stocksak), -An IMF delegation met with Ukrainian authorities and will work in the coming weeks to address their request for program monitoring to be increased in the wake Russia’s invasion. Gavin Gray, IMF mission chief, stated that this was a productive meeting.

Gray stated that International Monetary Fund staff met with Ukrainian authorities for four days in Vienna, and discussed their findings and conclusions with SerhiyMarchenko, Finance Minister, as well as Andriy Pyshnyi (Governor of the National Bank of Ukraine).

He said that the leaders of Ukraine deserved “considerable credit”, for maintaining a “significant degree of macroeconomic stability” following the invasion. This has resulted in a sharp contraction in gross domestic products and an increase in inflation, while also increasing the country’s fiscal deficit.

Gray stated that the Russian invasion in Ukraine, which began more than seven months ago, caused great human suffering and had a severe financial impact. Gray also stated that the talks were focused on macro-financial developments, 2023 budget and associated external funding needs, financial sector questions, and the mix policy to support macroeconomic stability.

Gray stated that IMF officials encouraged Ukraine not to reduce tax revenues, while they worked to align expenditures and financing. He did not give any details.

He said that both sides would continue working on Kyiv’s request to have Program Monitoring with Board Involvement, (PMB), continued in the coming weeks. PMB is a new option that was recently approved by its board.

Such an agreement would lay out the authorities’ policy intentions to support macroeconomic and financial stability and present an assessment of external financing needs for 2023, and could pave the way for a fully-fledged IMF program, Gray said.

The IMF approved $1.3 Billion in emergency funding for Ukraine via a new food shock window. This comes on top of the $1.4 Billion in emergency aid approved in March.

The Ukrainian authorities seek new IMF lending of approximately $20 billion as part a larger program.

Volodymyr Zelenskiy, President of Ukraine, appealed last week to international donors to provide $55 billion in additional financial assistance – $38 Billion to cover next year’s estimated budget deficit and $17 Billion to begin rebuilding critical infrastructure.

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