Ukraine and the International Monetary Fund (IMF) have come to a staff-level agreement on a range of macroeconomic and structural policies that may be backed by a new 48-month arrangement under the Extended Fund Facility (EFF). This information is reported by Ukrainian media, referencing a statement on the IMF website following the mission’s discussions in Kiev from November 17-21.
Closing Ukraine’s financing gaps
“IMF staff and the Ukrainian authorities have reached staff-level agreement on the authorities’ request for a new 48-month, extended arrangement under the Extended Fund Facility (EFF), with a potential access of SDR5.94 billion (around $8.1 billion, 295 percent of quota),” stated IMF mission leader Gavin Gray.
The agreement encompasses various fiscal and monetary policies aimed at grounding the program, which seeks to maintain macroeconomic stability, restore debt sustainability and external viability, combat corruption, and enhance governance, Gray noted.
“The program is expected to catalyze large-scale external support to close Ukraine’s financing gaps. In the baseline, the total financing gap is calculated at around $136.5 billion for 2026-29. In 2026-27, Ukraine faces a residual financing gap (taking into account existing financing commitments) of approximately $63 billion,” he added.
The new program could be presented to the IMF’s Executive Board for approval once the prior actions are completed and adequate financing assurances from donors are secured, although a specific date has yet to be established.
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Funding targets adjusted due to crisis
As previously reported, the current four-year IMF EFF arrangement, amounting to $15.6 billion, is currently in effect and was approved in March 2023. The upcoming ninth disbursement of SDR1.117 billion ($1.6 billion at the prevailing exchange rate) is slated for December.
Initially, the current arrangement aimed for a total external funding for Ukraine, with the involvement of international partners, to reach $115 billion in the baseline scenario and $140 billion in a negative scenario. However, as the crisis has persisted, these targets have been raised to $153 billion and $165 billion, respectively.
During the IMF mission’s engagement in Kiev from September 3-10, Ukrainian Prime Minister Yulia Sviridenko, alongside the head of the National Bank of Ukraine and the finance minister, formally requested the IMF for a new arrangement, tentatively set for 2026-2029. Given the ongoing crisis, this new arrangement is essential as the existing EFF setup is set to expire in March 2027.
