The IMF has approved a credit for Algeria totaling SDR 223.5 million (about $300 million) under the Compensatory and Contingency Financing Facility (CCFF) to help offset a temporary shortfall in exports of goods and services.
Prospects and policies
Despite a modest recovery in world oil and gas prices, Algeria’s external position has continued to be adversely affected. For the year ending June 30, 1999—the shortfall period—receipts from oil and gas sales are expected to be lower by $1.9 billion compared with the previous 12-month period. Against this background, the Algerian authorities remain committed to building on the stabilization achievements of the past three years, and it is expected that the direction of economic policymaking will be maintained by the new government toward ensuring macroeconomic stability and accelerating structural reforms.
The authorities have taken several steps in the past year to curb domestic demand and to improve the external current account and fiscal deficits. The central bank has allowed the dinar to depreciate by around 15 percent (in nominal terms) against the U.S. dollar since September 1998. In addition to the positive budgetary impact of this measure, the government took steps to reduce public expenditures and to pursue a tight wage policy. On the monetary front, the central bank is determined, however, not to allow any further acceleration in inflation and to further tighten monetary policy if needed. On the structural front, the government is committed to further liberalizing the economy and creating an environment conducive to private sector development.
Press Release No. 99/19, May 26
Ukraine: EFF augmentation
The IMF has approved a request by Ukraine to increase by SDR 274.4 million (about $366 million) the IMF’s financial support under the current three-year Extended Fund Facility (EFF) Arrangement, which was approved on September 4, 1998, in an amount of SDR 1.6 billion (about $2.2 billion). (See Press Release No. 98/38, IMF Survey, September 28, 1998, page 297.) The augmentation, of which SDR 37.5 million (about $50 million) is available immediately, is a response to the difficult external position arising from the impact of generally weak commodity prices for Ukraine’s exports, particularly metals, and depressed demand in the region due to the continuing difficulties in Russia. More recently, the Kosovo crisis has disrupted Ukraine’s trade routes along the Danube. The decision was made in conjunction with the completion of the second review of the economic and financial program supported by the EFF, and triggered a total release of SDR 134.7 million (about $180 million).
Ukraine’s financial situation remains very fragile. The authorities intend to implement the necessary policy changes to promote financial stability and economic growth. At the same time, however, in view of the country’s heavy debt-service obligations, Ukraine’s economic recovery will require the continued involvement of private creditors. In that regard, a collaborative solution to Ukraine’s debt-service problem must be found in line with Ukraine’s capacity to pay. The authorities’ recent efforts in this area are consistent with the steps envisaged under the IMF-supported program; progress in this area will be a key factor to be considered in the context of the financing review for the next drawing that is expected to be considered by the IMF’s Executive Board in June 1999.
Ukraine joined the IMF on September 3, 1992; its quota is SDR 1.4 billion (about $1.8 billion). Its outstanding use of IMF credit currently totals SDR 2.0 billion (about $2.6 billion).
Press Release No. 99/20, May 27