BOFIT Viikkokatsaus / BOFIT Weekly 2017/14

At its meeting this week, the executive board of the International Monetary Fund approved release of the fourth tranche of a $17.5 billion support programme for Ukraine under its Extended Fund Facility. The value of this latest tranche was $1 billion. To date, Ukraine has received a total of $8.4 billion from the IMF since its four-year EEF lending programme commenced in March 2015. This week, Ukraine also received a €600 million loan tranche from the EU.

In its report relating to the approval decision, the IMF noted that Ukraine has made progress in reforming many sectors. However, the IMF added that privatisation efforts were moving too slowly and that not sufficiently has been made with fighting corruption. Nevertheless, the country has succeeded in holding down its public sector deficit to relatively low levels by, in particular, reducing energy subsidies.

The IMF forecasts that Ukraine's GDP will grow about 2 % this year and about 3 % in 2018. With an acceleration of structural reforms, the IMF estimates that Ukraine could reach GDP growth approaching 4 % p.a. over the medium term. After two years of steep decline, Ukraine's GDP grew by 2.3 % in 2016.