IMF concludes mission to Ukraine, urges authorities to avoid eroding tax revenue

WASHINGTON, Oct 21 (Reuters) – An IMF team held fruitful discussions with Ukrainian authorities this week and will work in the coming weeks on their request to strengthen program monitoring in the wake of the Russian invasion, the IMF said. IMF mission chief Gavin Gray on Friday.

Gray said International Monetary Fund staff met for four days in Vienna with Ukrainian officials and discussed their findings with Finance Minister Serhiy Marchenko and National Bank of Ukraine Governor Andriy Pyshnyi.

He said Ukraine’s leadership deserved “considerable credit” for maintaining a “significant degree of macroeconomic stability” after the invasion, which caused a sharp contraction in gross domestic product and a sharp rise in inflation, while sending the country’s budget deficit to unprecedented levels.

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“The Russian invasion of Ukraine which began more than seven months ago has caused enormous human suffering and had a severe economic impact,” Gray said, adding that the talks focused on recent developments. macroeconomics, the 2023 budget and associated external financing needs, sectoral issues and the mix of policies to support macroeconomic stability.

Gray said IMF officials are encouraging Ukraine to refrain from measures that erode tax revenue as they work to align spending with available financing, but gave no details.

He said the two sides would continue to work in the coming weeks on Kyiv’s application for follow-on program with board participation (PMB), a new option recently approved by the fund’s board.

Such an agreement would outline the authorities’ policy intentions to support macroeconomic and financial stability and present an assessment of external financing needs for 2023, and could pave the way for a full-fledged IMF program, Gray said.

The IMF this month approved $1.3 billion in new emergency financing for Ukraine through a new food shock window, in addition to $1.4 billion in aid from approved in March.

The Ukrainian authorities are requesting new IMF loans of around $20 billion as part of a larger program.

Ukrainian President Volodymyr Zelenskiy last week appealed to international donors for additional financial support of $55 billion – $38 billion to cover next year’s estimated budget shortfall and another $17 billion to start rebuild critical infrastructure. Read more

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Reporting by Andrea Shalal; Editing by Mark Porter and Daniel Wallis

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