Ukraine is again in line for renewal of the EFF (extended financing facility) program: on September 20 the question will be considered at a session of the IMF Council of Directors. Winding up his visit to Kyiv on Sunday, Chief of the IMF Mission Julian Berengaut stated that the council will receive a recommendation to continue financing. According to him, the mission analyzed the status of how Ukraine had fulfilled the preliminary conditions within the fifth consideration of the EFF program and stated that Ukraine had indeed fulfilled the conditions for renewed financing as set forth in earlier agreements.
The mission head also mentioned that the 2002 draft budget had been examined together with the government and that in his opinion the planned levels of revenues (UAH 57.1 billion for the total budget) and deficit (1.7% of GDP) were acceptable. Should there be a positive decision to confirm the fifth and sixth reviews of the EFF program Ukraine could already by the end of this month receive about $375 million, which would be earmarked to increase NBU foreign currency reserves and service the debt to the IMF.
Success of the seventh and eighth reviews of the EFF program slated for late October will depend on whether Verkhovna Rada approves the 2002 budget. As a result Ukraine could receive an additional $375 million in December, and in 2002 three reviews could enable Ukraine to receive about $570 million ($190 million each time).
This September renewal of financing could also open the way for Ukraine to receive $250 million this year from the World Bank under the Program Systemic Loan scheme (WB directors will also meet on September 20). Receipt of these loans was factored into the 2001 state budget. The total sum of this project is $750 million, which the bank proposes dividing into equal annual installments. The renewal of financing should also serve as a signal to the Paris Club of creditors, which in July agreed to restructuring $580 million of Ukraine’s debt over a twelve year period.
