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Ukrainian Foreign Reserves Increase as Economy Shows Signs of Strengthening

Following the second review by the IMF in September, foreign reserves held by Ukraine have increased. 

Reserves have increased by 22% in the past 12 months to $15 billion, according to the National Bank of Ukraine.

The IMF has loaned $7.6 billion to the country in its loan program which totals $17.5 billion to the end of 2018. Ukraine’s slow progress on stamping down on corruption and structural reforms were initially slowing the IMF installments.

Whilst the IMF are satisfied for now, they point to many areas that require further progress. Christine Legarde said the following in her summary progress in the country;

‘Further progress in fiscal reforms is key to ensure medium-term sustainability. The authorities need to avoid tax policy changes that lead to higher deficits. The focus should be on improving tax and customs administrations.

Moreover, parametric pension reform is crucial to reduce the pension fund’s large structural deficit, help reduce fiscal deficits and public debt, and create room to bring pensions to sustainable levels over time.

“Monetary policy has been skillfully managed and financial sector reforms have started to yield results. Priority should continue to be given to reducing inflation and rebuilding international reserves, also to make room for the gradual removal of remaining administrative measures. The authorities need to further strengthen the banking system through recapitalization, unwinding of related-party lending, and resolution of impaired assets.’

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