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The Executive Board of the International Monetary Fund (IMF) today approved a 29-month SDR 10 billion (about US$ 15.15 billion) Stand-By Arrangement (SBA) for Ukraine in support of the authorities’ economic adjustment and reform program.1 An initial disbursement equivalent to SDR 1.25 billion (US$ 1.89 billion) is available immediately, with subsequent disbursements subject to quarterly reviews. The SBA entails exceptional access to IMF resources, amounting to 728.9 percent of Ukraine’s quota in the Fund.

Following the Executive Board’s discussion of Ukraine, Mr. Lipksy, First Deputy Managing Director and Acting Chair, made the following statement:

“Ukraine is emerging from a difficult period during which the economy was severely hit by external shocks and exacerbated by domestic vulnerabilities. The authorities are committed to addressing existing imbalances and putting the economy on a path of durable growth, through important fiscal, energy, and financial sector reforms.

“At the core of the authorities’ economic program is a comprehensive consolidation strategy to safeguard fiscal sustainability. Fiscal adjustment will start in 2010 and deepen in 2011–12 backed by robust structural reforms of the pension system, public administration, and the tax system. The financial position of the gas sector will be strengthened, including through domestic price hikes and broader reforms supported by other multilateral institutions, which will help eliminate energy subsidies and create a more modern and viable sector, while protecting the most vulnerable with better targeted social assistance programs.

“Reforms are also underway to rehabilitate the financial system and enhance the National Bank of Ukraine’s independence and accountability. The planned recapitalization of banks and steps to strengthen the supervisory and institutional framework are essential to restore financial stability, tackle the mounting problem of impaired assets, and eliminate impediments for robust economic recovery.

“Sustained implementation of these reforms will help Ukraine entrench macroeconomic stability, boost confidence, facilitate access to capital markets, and emerge with more balanced and robust growth.

“The Executive Board also reviewed a report from the Managing Director on the provision of data on net international reserves, which led to two noncomplying purchases in 2009 and a breach of obligation under Article VIII, Section 5 of the IMF’s Articles of Agreement. Given the minor economic effect of the deviation and that action has already been taken to change the NIR definition under the new Stand-By Arrangement, the Board agreed to grant waivers of nonobservance of the performance criterion and that no further remedial action is required”.