See “Ex Post Evaluations of Exceptional Access Arrangements—Revised Guidance Note”, February 2010, available at: http://www.imf.org/external/np/pp/eng/2010/022510.pdf.
See “Ukraine: Ex Post Evaluation of Exceptional Access Under the 2008 Stand-by Arrangement,” IMF Country Report No. 11/325, November 2011, available at http://www.imf.org/external/pubs/ft/scr/2011/cr11325.pdf.
On February 26, 2010, a day after assuming office, President Yanukovych established the Committee on Economic Reforms. The reform program developed by the committee, “Prosperous Society, Competitive Economy, Effective Government” (http://www.usubc.org/site/files/Ukraine_Program_of_Economic_Reforms_2010-2014.pdf), was released in June 2010 and drew on recommendations from McKinsey & Company and the Independent International Experts Commission led by economists Anders Åslund and Oleksandr Paskhaver (http://www.iie.com/publications/papers/aslund0210.pdf).
One of them was a structural benchmark reset as prior action.
The program also erred on the detailed side in defining quantitative targets and structural benchmarks. Such detail was warranted, as exemplified by a seemingly unambiguous prior action at the time of the 2010 program request to “increase heating tariffs.” The prior action was met in the legal sense, but not in substance, as the regulator announced the tariff increase but communal utility companies continued charging old tariffs when the heating season started. Another prior action at the time of the first review was necessary to ensure the pass-through of gas tariff increases to end users.
In addition to sufficiently tackling short-term stabilization needs to resolve the country’s underlying BOP problems, a shorter program could have covered the initial elements of the structural reform agenda, positioning these structural policies as part of a longer-term reform strategy.
The drop in reserve adequacy as measured by the IMF 2011 metric was primarily due to a rise in the stock of portfolio liabilities.
Overall financing in 2010 was better than projected, but the current account deficit ballooned in 2011–12, in part due to the real appreciation of the hryvnia and widening fiscal deficits.
See “GRA Lending Toolkit and Conditionality: Reform Proposals” (http://www.imf.org/external/np/pp/eng/2009/031309a.pdf) and “GRA Lending Toolkit and Conditionality—Reform Proposals—Supplement 1, Revised Proposed Decisions” (http://www.imf.org/external/np/pp/eng/2009/031909.pdf).
When the program moved irretrievably off-track, however, fiscal and quasi-fiscal deficits widened further. Combined with weak growth and higher borrowing costs, these deficits are projected to raise Ukraine’s public debt to levels likely to generate financing difficulties (see next section).
Ukraine’s real GDP growth rate averaged 7.5 percent a year over 2000–07.
This was one of the primary reasons for the 2008 Stand-by Arrangement (SBA), which was frontloaded and included a substantial budget support component.
At the time of the SBA request, with an output gap estimated at -7.5 percent in 2010, the cyclically-adjusted primary balance was projected to improve from -0.5 percent of GDP in 2010 to 1.0 percent in 2011, and to 1.2 percent in 2012.
While non-implementation of reforms likely contributed to the lower growth outturn in 2012–13, the external environment also turned out to be less supportive than projected at program approval; global growth in both 2012 and 2013 was more than a percentage point below what was forecast in the April 2010 WEO.
The Brussels Declaration of 2009 opened the way towards reform of the Ukrainian gas sector, and enabled the financing of a modernization program for Ukraine’s gas pipelines by international financial institutions. It was signed by Ukraine’s Prime Minister, EU commissioners, the EBRD, and the World Bank. See http://eeas.europa.eu/energy/events/eu_ukraine_2009/joint_declaration_en.pdf.
In early 2009, the NBU revised banks’ FX net open position calculations by removing loan loss provisions against FX loans from the statutory calculation (Resolution 109). This forced banks to sell FX to comply with the new resolution, which in turn eased pressure on the exchange rate, but also pushed most banks into a short position in economic terms (up to about $8 billion for the banking system as a whole)..
The IMF TA ranged from high effectiveness in the area of accounting to low in the area of monetary policy and operations.
All three exchange rate assessment methodologies suggested that the exchange rate was within 2 percentage points of equilibrium, well within the margin of error of these methodologies.
In particular, a sudden unwinding of Resolution 109 could have put pressure on hryvnia liquidity and the exchange rate, particularly when combined with ongoing external deleveraging of banks (the banks would move from hryvnia to FX to reduce their open FX positions).
In addition to Resolution 109, other measures included raising reserve requirements on FX deposits, lowering banks’ net open long FX limits, and requiring FX buyers to present identification.
See Review of Low-Income Countries—Proposals for Implementation—Amendments to PRGT Instrument (Decision No. 15352; April 8, 2013) and Review of Facilities for Low-Income Countries—Proposals for Implementation (March 18, 2013; and Supplement 2; March 19, 2013).
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.