BOFIT Viikkokatsaus / BOFIT Weekly 2016/37

At its meeting on Wednesday (Sept. 14), the executive board of the International Monetary Fund voted to grant Ukraine the third tranche of its four-year $17.5 billion Extended Fund Facility (EFF) agreed in March 2015. The current tranche is worth about $1 billion. During 2015, Ukraine received about $6.7 billion from its EFF. The release of the third tranche was delayed considerably from the original schedule. As required by the conditions of Ukraine’s EFF, the country has e.g. increased regulated energy rates, decreased public sector deficit and improved stability of the banking system. The IMF is however, worried on the course of Ukraine’s fiscal policy and its progress in fighting corruption. Several international financial institutions, including the World Bank, are conditioning their lending to Ukraine in part on the IMF’s continuation of its EFF with Ukraine. Ukraine’s GDP growth is expected to reach 1.5 % this year and 2.5 % next year.

Ukraine’s GDP growth and public sector deficit, 2012–2017

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Sources: Ukraine statistics officials and Consensus Economics.