Ukraine–IMF relations

Since 1992 Ukraine has been a member of the International Monetary Fund (IMF).

Ukraine did officially become a member of the IMF and the World Bank on 3 September 1992.

The IMF approved a $2.2 billion Extended Fund Facility (EFF) with Ukraine in September 1998. In July 1999, the 3-year program was increased to $2.6 billion. Ukraine's failure to meet monetary targets and/or structural reform commitments caused the EFF to either be suspended or disbursements delayed on several occasions. The last EFF disbursement was made in September 2001. Ukraine met most monetary targets for the EFF disbursement due in early 2002; however, the tranche was not disbursed due to the accumulation of a large amount of VAT refund arrears to Ukrainian exporters which amounted to a hidden budget deficit. The EFF expired in September 2002, and the Ukrainian Government and IMF began discussions in October 2002 on the possibility and form of future programs.

The IMF granted Ukraine a $16.4 billion loan in October 2008, of which the government had far received $10.6 billion in May 2010. Further payments were frozen late 2009 after Ukraine raised minimum wages and pensions contrary to IMF recommendations.

In May 2010 Ukraine was the third largest borrower of the IMF, following Hungary ($11.6 billion) and Romania ($12.5 billion).

On 28 July 2010 the IMF approved a 29-month $15.15 billion loan to Ukraine. Among others this led to a 50 percent increase on household natural gas utility prices in July 2010 for Ukrainian consumers (a key demand of the IMF in exchange of the loan). On 20 December 2013 the IMF stated that the Ukrainian government had only partially implemented the agreements reached in 2010 with the fund "and in this connection the program had not been implemented".

In December the Ukrainian Prime Minister, Mykola Azarov, stated "the extremely harsh conditions" of a renewed IMF loan (presented by the IMF on 20 November 2013), which included big budget cuts and a 40% increase in natural gas bills, had been the last argument in favor of the Ukrainian government's decision to suspend preparations for signing the Ukraine–European Union Association Agreement on 21 November 2013. The decision to put off signing this EU-Ukraine Association Agreement lead to massive protests in Ukraine. On 7 December 2013 the IMF clarified that it was not insisting on a single-stage increase in natural gas tariffs in Ukraine by 40%, but recommended that they be gradually raised to an economically justified level while compensating the poorest segments of the population for the losses from such an increase by strengthening targeted social assistance. On 10 December President Yanukovych stated "We will certainly resume the IMF negotiations. If there are conditions that suit us, we will take that path". However, Yanukovych also (once again) stated that the conditions put forward by the IMF were unacceptable "I had a conversation with U.S. Vice President Joseph Biden, who told me that the issue of the IMF loan has almost been solved, but I told him that if the conditions remained... we did not need such loans".

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Wikipedia