A1. Revoke Articles 84 and 86 from the 2009 Budget Law. Prior action has been completed. On 17 March 2009, Parliament revoked Budget Law article 84, which obliged the NBU to purchase government securities, and article 86, which imposed the presence of a Cabinet of Ministers member in the NBU refinancing decisions.

A2. Enact a joint NBU and Cabinet of Ministers resolution to set out the guiding principles for the resolution strategy, including provision of adequate liquidity support to banks that are recapitalized. Prior action has been completed. On April 2, 2009, the Cabinet of Ministers and NBU adopted a joint resolution (#421) in compliance with the prior action.

A3. Adopt resolutions that specify the conditions for NBU to extend liquidity finance to solvent banks with adequate collateral and conditionality, as well as procedures to ensure that NBU refinancing is not provided to potentially insolvent banks. Prior action has been completed. NBU resolutions (#259 and #459) have been adopted in compliance with the prior action.

A4. Publication of a statement by the NBU renewing the commitment to implement a flexible exchange rate regime and a transparent intervention strategy, including via pre-announced regular auctions. Prior action has been completed. On May 5, 2009, the NBU has released, and posted on its website, a statement in compliance with the prior action.

A5. Adopt and implement a resolution specifying that the official exchange rate will be set, on a daily basis, as the average transaction-weighted rate of the previous day (with intra-day adjustments if necessary to keep it within 2 percent of the market rate). Prior action has been completed. On April 30, 2009, the NBU issued a resolution (#264) in compliance with the prior action. It became effective as of May 7, 2009 following its registration with the Ministry of Justice. The NBU will publish the official exchange rate in line with the resolution starting May 8, 2009.

A6. Announce a tender for a Special Audit of NBU refinancing and foreign exchange operations in 2008, to be executed by a qualified international audit firm, on the basis of a terms of reference agreed with IMF staff. Prior action has been completed. On April 30, 2009, the NBU adopted a resolution (#257) announcing a tender for such an audit, based on the terms of reference agreed with staff. On May 5, the NBU sent letters inviting international audit companies to submit bids.

A7. Adopt measures reducing the general government deficit by at least 1 percent of GDP in 2009. Prior action has been completed. On March 31, 2009, laws (#4265 and #4202) were adopted increasing excises on alcohol, diesel, and tobacco. On April 14, 2009, the Cabinet of Ministers adopted a resolution increasing the pension contribution for taxpayers subject to the simplified tax system. The resolution also implied an increase in the domestic prices of natural gas, electricity and coal. An agreement was signed with Japan in March 2009 for the sale of carbon emission rights.

Exchange restriction arising from the prohibition on purchase of foreign exchange for settlement on imports that do not enter Ukraine and are designated for resale to non-residents. Exchange restriction has been eliminated. NBU has issued a resolution (#269, May 6, 2009) that rescinds this prohibition. [Waiver requested]

Exchange restriction arising from the limit (UAH 75.000 per month) on purchase of foreign exchange on the interbank market and on transfers for non-trade transactions by resident and non-resident individuals. The restriction has been revoked. [No waiver required as the measure was introduced before the program]

Exchange restriction arising from the limitation on withdrawal of time deposits by individuals before the deposits’ maturity. To be eliminated in October, 2009. [No waiver required as the measure was introduced before the program]

Exchange restriction arising from the requirement that banks hold investors’ Hryvnia proceeds from the sale of investments and revenues, profits and other funds received from investment activities in Ukraine for 5 days before converting to foreign currency. The NBU has adopted a decree (dated May 6, 2009) that specifies that transactions with securities listed at Ukrainian exchanges are exempt from the 5-day conversion period, thereby limiting the applicability of the restriction. [No waiver required as the measure was introduced before the program]

Multiple currency practice arising from the official foreign exchange auction. No action taken to date. MCP is expected to disappear over time as the foreign exchange market stabilizes and auction spreads narrow. [Waiver requested]

Multiple currency practice arising from the use of the official exchange rate for certain transactions. MCP has been eliminated. The NBU has adopted a resolution (#264, April 30, 2009) that limits the maximum discrepancy between the official and market rate to 2 percent. [Waiver requested]

On February 2, 2009, the authorities adopted a law (#923) imposing a 13 percent import surcharge on a wide range of commodities (excluding those of “critical importance”). The law was adopted for balance of payments reasons. On March 16, 2009, a draft bill (#4206) was introduced in parliament to rescind the import surcharge. This bill has not yet been adopted. However, the government notified the mission team that a cabinet of ministers resolution was adopted to restrict the surcharge to only two commodities. In a letter to the MD, and in the MEFP, the authorities have committed to remove the remaining surcharges.