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© 2008 International Monetary Fund
December 2008
IMF Country Report No. 08/384
Ukraine: Request for Stand-by Arrangement—Staff Report; Staff Supplement; Press Release on the Executive Board Discussion, and Statement by the Executive Director for Ukraine
In the context of the request for a Stand-By Arrangement, the following documents have been released and are included in this package:
The staff report for the Request for Stand-by Arrangement, prepared by a staff team of the IMF, following discussions that ended on October 28, 2008, with the officials of Ukraine on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on November 3, 2008. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.
A staff supplement of November 3, 2008, on the assessment of the risks to the Fund and the Fund’s liquidity position.
A Press Release summarizing the views of the Executive Board as expressed during its November 5, 2008 discussion of the staff report that completed the request.
A statement by the Executive Director for Ukraine.
The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.
Copies of this report are available to the public from
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Telephone: (202) 623-7430 • Telefax: (202) 623-7201
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Price: $18.00 a copy
International Monetary Fund
Washington, D.C.
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INTERNATIONAL MONETARY FUND
UKRAINE
Request for Stand-By Arrangement
Prepared by the European Department in Consultation with Other Departments
Approved by Juha Kähkönen and Adnan Mazarei
November 3, 2008
Stand-By Arrangement. In the attached letter, the Ukrainian authorities are requesting a two-year $16.5 billion (SDR 11 billion) Stand-By Arrangement involving exceptional access (802 percent of quota). An initial purchase of SDR 3 billion becomes available upon Board approval of the arrangement, and the remainder phased thereafter, subject to quarterly reviews. The request is being considered under the Emergency Financing Mechanism (EFM). In the letter the authorities outline the economic program for which they seek Fund financial support and describe its economic policy objectives. The two key objectives are (i) to stabilize the domestic financial system against a backdrop of global deleveraging and a domestic crisis of confidence; and (ii) to facilitate adjustment of the economy to a large terms of trade shock. The authorities’ plan incorporates monetary and exchange rate policy shifts, banking recapitalization, and fiscal and incomes policy adjustments. Policies have been set recognizing that there are difficult trade-offs between the two objectives.
Discussions. During October 16–28, 2008 the staff team met with the President, Mr. Yuschenko; the Prime Minister, Ms. Tymoshenko; the Speaker of the Parliament, Mr. Yatseniuk; the Minister of Finance, Mr. Pynzenyk; the Governor of the National Bank of Ukraine, Mr. Stelmakh; the First Deputy Chief of Staff of the Presidential Administration, Mr. Schlapak; and other senior officials; ambassadors; as well as representatives of the private banking and business communities. The mission also met the leaders of the Party of Regions, Mr. Yanukovich and other senior representatives.
Staff. The staff team comprised Ms. Pazarbasioglu (head); Messrs. Flanagan and Moulin (EUR); Mr. Arslanalp (FAD); Messrs. Garcia-Pascual and Olafsson (MCM); and Mr. Hofman (SPR). Mr. Horvath, resident representative, assisted the mission, and the mission cooperated closely with World Bank staff on structural issues. Mr. Yakusha, Alternate Executive Director for Ukraine, attended most meetings.
Publication. The Ukrainian authorities have consented to the publication of the staff report.
Contents
I. Introduction
II. The Authorities’ Program
A. Objectives and Strategy
B. Macroeconomic Framework
C. The Program for 2009
III. Program Modalities
IV. Staff Appraisal
Boxes
1. Banking-Sector Structure, Risks, and Scenario Analysis
2. Calibrating the Current Slowdown: A Comparison With 2004–2005
3. Exception Access Criteria
4. Rationale for the Proposed Structural Conditionality under the SBA
Figures
1. Recent Macroeconomic Developments
2. Fiscal Policy Indicators
3. Medium-Term Outlook
4. Potential Ouput and Structural Reforms
5. Public Debt Sustainability: Bound Tests
6. External Debt Sustainability: Bound Tests
Tables
1. Selected Economic and Social Indicators, 2004–09
2. Selected Vulnerability Indicators, 2004–08
3. Medium-Term Balance of Payments, 2006–13
4. Monetary Accounts, 2004–10
5. Financial Soundness Indicators for the Banking Sector, 2006–08
6. General Government Finances
7. Medium-Term Macroeconomic Framework, 2004–13
8. Moving to Inflation Targeting: Progress Report
9. Structural Reforms
10. Public Sector Debt Sustainability Framework, 2003–13
11. External Debt Sustainability Framework, 2003–13
12. Proposed Access, 2008–10
13. Indicators of Fund Credit, 2003–08
Attachment
I. Letter of Intent and Memorandum of Economic and Financial Policies
II. Technical Memorandum of Understanding
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INTERNATIONAL MONETARY FUND
UKRAINE
Request for Stand-By Arrangement Informational Annex
Prepared by the European Department
(In consultation with other departments and the World Bank)
November 3, 2008
Contents
Appendices
I. Fund Relations
II. Relations with World Bank
III. Relations with the EBRD
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INTERNATIONAL MONETARY FUND
Ukraine—Assessment of the Risks to the Fund and the Fund’s Liquidity Position
Prepared by the Finance and Strategy, Policy, and Review Departments
In consultation with other Departments
Approved by Andrew Tweedie and Adnan Mazarei
November 3, 2008
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Press Release No. 08/271
FOR IMMEDIATE RELEASE
November 5, 2008
International Monetary Fund
Washington, D.C. 20431 USA
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November 5, 2008
