News Brief No. 99/37

News Brief: IMF Executive Board Completes Ukraine Review and Approves Next Credit Tranche

June 30, 1999

Stanley Fischer, First Deputy Managing Director of the International Monetary Fund (IMF), made the following statement today: "I am pleased to announce that the Executive Board of the IMF today completed the financing assurances review under Ukraine's current three-year Extended Fund Facility (EFF), which was approved on September 4, 1998. As a result, Ukraine may now purchase an additional SDR 86.10 million (about US$115 million) from the IMF.

"Directors welcomed the progress made by the authorities in maintaining macroeconomic stability. They noted that monetary restraint supported by fiscal consolidation had helped reduce inflation and contributed to a buildup in foreign reserves. At the same time, they stressed the need to maintain fiscal discipline in the months leading up to the Presidential elections at end-October, including by strengthened efforts to collect revenues and by timely clearance of expenditure arrears. Directors urged the authorities to accelerate the structural reforms envisaged under the program.

"Directors noted that Ukraine continues to face a highly fragile macroeconomic environment. 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 ability to pay over the medium term. Directors took note of the negotiations thus far with private creditors but urged the authorities and Ukraine's creditors to persevere in their efforts to reach an agreement on terms comparable to other recent agreements with other creditors both domestic and foreign, and taking account of debt falling due in the period ahead. The outcome 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 July 1999," Fischer said.