Journal Issue

Ukraine: Second Review Under the Stand-By Arrangement and Request for Modification of Performance Criteria—Informational Annex

International Monetary Fund
Published Date:
September 2009
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Appendix I: Ukraine—Fund Relations

(As of June 30, 2009)

I. Membership Status: Joined 09/03/1992; Article VIII

II. General Resources Account:

SDR MillionQuota
Fund holdings of currency6265.40456.66
Reserve position in Fund0.020.00

III. SDR Department:

SDR Million%Allocation

IV. Outstanding Purchases and Loans:

SDR Million%Quota
Stand-By Arrangements4,875.00355.32
Extended arrangements18.401.34

V. Latest Financial Arrangements:



Amount Approved

(SDR million)
Amount Drawn

(SDR Million)

VI. Projected Payments to Fund (Expectations Basis)1

(SDR million; based on existing use of resources and present holdings of SDRs):


VII. Exchange Arrangements:

In September 1996, the authorities introduced the hryvnia (Hrv) at a conversion rate of karbovanets (Krb) 100,000 to HRV 1. The rate was initially informally pegged to the dollar. In September 1997, the peg was replaced by a formal band of Hrv 1.7-Hrv 1.9 per U.S. dollar. The limits of the band were moved on several occasions. Since March 19, 1999, the exchange rate for the hryvnia has been determined by the interbank market for foreign exchange. On February 22, 2000, the NBU officially confirmed its intention to allow the free float of the hryvnia, but intervened regularly to limit fluctuations to a small band, first around Hrv 5.33 per U.S. dollar, and from March 2005, around Hrv 5.05 per U.S. dollar. It was classified as a de facto peg. From April 2008, the exchange rate arrangement has been reclassified as a managed float.

On September 24, 1996, Ukraine accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund's Articles of Agreement, and two remaining restrictions were eliminated in May 1997. A number of new restrictions on current international transactions were introduced in September 1998, and were removed in March 1999.

VIII. Article IV Consultation:

The discussions for the 2008 Article IV Consultation took place in Kyiv between March 20 and April 1, 2008. The concluding statement of the mission was posted at on April 16, 2008.

The IMF team comprised Messrs. Ford (Head), Flanagan, Moulin (all EUR), Mr. Driessen (MCM), Ms. Zakharova (FAD), Mr. Hofman (PDR), and Mr. Horvath, Resident Representative.

The mission met with NBU Governor Stelmakh, Finance Minister Pynzenyk, Economy Minister Danylyshyn, First Deputy Chief of Staff to the President Shlapak, other senior officials, representatives of parliament, the diplomatic community, financial sector, and think tanks. Mr. Yakusha (OED) attended the discussions.

A separately published Selected IssuesPaper provides background on two topics: (1) Two Aspects of the Ukrainian's Business Cycle; (2) Strengthening Ukraine's Fiscal Framework. A Working Paper provides background on Resolving Large Contingent Fiscal Liabilities.

IX. FSAP Participation

A joint World Bank-International Monetary Fund mission conducted an assessment of Ukraine financial sector as part of the Financial Sector Assessment Program (FSAP) between May 10-24, 2002. An update mission visited Ukraine between February 18-21, 2003, and the Financial Sector Stability Assessment (FSSA) report (IMF Country Report No. 03/340) was considered by the Executive Board on May 14, 2003. The observance of the following standards and codes was assessed: Basel Core Principles for Effective Banking Supervision; Code of Good Practices on Transparency in Monetary and Financial Policies; CPSS Core Principles for Systemically Important Payment Systems; OECD Principles for Corporate Governance; Accounting and Auditing Practices; World Bank's Principles and Guidelines for Effective Insolvency and Creditor Rights System; and AML/CFT Methodology.

A further update mission visited Ukraine between June 11-22, 2007 and July 9-20, 2007. The observance of the following standards and codes was assessed: Basel Core Principles for Effective Banking Supervision; and IOSCO Core Principles of Securities Regulation. An updated Financial Sector Stability Assessment (FSSA) was considered by the Executive Board as part of the 2008 Article IV consultation.


A Data ROSC Module was conducted in April 3-17, 2002, and was considered by the Executive Board on August 5, 2003 (IMF Country Report No. 03/256). A Fiscal Transparency Module (experimental) was issued in September 1999, and an update in April 2004 (IMF Country Report No. 04/98).


An update safeguards assessment of the NBU was completed on April 16, 2009 in connection with the Stand-By Arrangement that was approved on November 5, 2008. The assessment concluded that the NBU continues to publish externally audited financial statements and has strengthened aspects of its safeguards framework since the 2004 assessment, in particular the internal audit function. However, the ongoing economic crisis has significantly increased the NBU's financial and operational risks and independence has been impaired in the past by ad hoc legislation. A weak governance structure, lack of independent audit oversight, and non-transparent decision-making add further safeguards risks. To address the reputational concerns caused by the non-transparent decision-making, an external review of the NBU's liquidity support and foreign exchange operations during the fourth quarter of 2008 was recommended and subsequently conducted by Ernst & Young Kiev. Enactment of legal revisions were proposed to strengthen independence and the governance structure, provide for independent audit oversight, and ensure consistency in the financial reporting. To safeguard data integrity and compliance with program definitions during the arrangement, the NBU Internal Audit Department agreed to review the monetary data at program test dates and formally report its findings to the Fund.

This schedule presents all currently scheduled payments to the IMF, including repayment expectations and repayment obligations. The IMF Executive Board can extend repayment expectations (within predetermined limits) upon request by the debtor country if its external payments position is not strong enough to meet the expectations without undue hardship or risk.

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