News Brief No. 96/7

News Brief: Statement by IMF Managing Director on Ukraine

September 13, 1996

The Government of Ukraine has notified the International Monetary Fund (IMF) that it has introduced its new currency, the hryvnia. Ukraine has indicated that all monetary holdings in the former currency, the karbovanets, will be converted into hryvnia at a single rate of conversion (Krb 100,000 for one hryvnia). During the period September 2-September 16, the karbovanets and the hryvnia have been allowed to circulate in parallel. Beyond this period, the hryvnia will be Ukraine's sole legal tender. The Government has expressed its satisfaction about the pace of conversion of monetary holdings.

The authorities have also indicated that certain administrative restrictions that were introduced in the context of the currency conversion have now been lifted. A price freeze that was introduced on September 2 has been canceled by the Government. Restrictions on the use of foreign currency accounts have also been lifted.

Commenting on the introduction of the hryvnia, IMF Managing Director Michel Camdessus made the following statement:

"The Management of the IMF welcomes the introduction of the hryvnia and the continued commitment of the Ukrainian authorities to the program supported by a stand-by arrangement with the IMF. The sound financial policies pursued by Ukraine so far in 1996 have helped reduce inflation and stabilize the exchange rate. Together with the structural reforms undertaken as part of the program, in particular privatization of state enterprises, this has helped pave the way toward the recovery of the economy. The informal sector of the economy is already growing rapidly."

On May 10, 1996, the IMF approved a stand-by arrangement with Ukraine in an amount equivalent to SDR 598.2 million (about US$864 million). Under the present arrangement, Ukraine has made five purchases for a total of SDR 335 million (about US$484 million).