IMF commits to supporting Ukraine, despite ongoing war, until end of 2025, says Pyshnyi
Andriy Pyshnyi, head of the NBU (Photo:Oleksandr Medvedev / NV)
The negative scenario of a 10% decrease in Ukraine’s GDP in 2023 and a 2% decrease in 2024 set out in the Extended Fund Facility (EFF) program confirms the IMF’s readiness to support the country no matter what, National Bank of Ukraine Governor Andriy Pyshnyi told Interfax-Ukraine on April 5.
“The program has been approved, even if the negative scenario (comes about), and even if the financial gap amounts to $140 billion... (the IMF is) ready to support Ukraine under any circumstance,” Pyshnyi said.
Pyshnyi said the approved program is revolutionary for the IMF, as it will be implemented in a country that is involved in a full-scale war. He added that the program was based on the IMF’s updated credit policy in March, which provides opportunities for countries facing uncertainty due to exogenous factors.
He said the existence of such a negative scenario gives the fund “some comfort,” especially since the probability of the war continuing cannot be ruled out under such high uncertainty.
The NBU head added that this also confirms the readiness of the international partners of the fund, primarily the G7 countries and the EU, to stand by Ukraine even in adverse circumstances. It also shows an understanding that the required level of financial support may rise relative to the baseline scenario – which projects a total need of $115 billion over four years.
Deputy NBU Governor Serhiy Nikolaychuk, commenting on the difference between the IMF’s baseline scenario and the NBU’s scenario, noted that the fund traditionally takes a more conservative position.
Nikolaychuk stressed that the NBU, under the agreed program with the IMF, retains the ability to adjust its own macro forecast and, during its next update at the end of April, is likely to improve its GDP growth estimate for this year compared to the 0.3% announced in January.
As stated by the head of the IMF mission, Gavin Gray, after the approval of the EFF program, the baseline scenario assumes the winding down of the war by mid-2024, while the negative scenario sees the war extending until the end of 2025, with greater intensity.
In the baseline scenario, the dynamics of Ukraine’s GDP in 2023 are defined from a 3% decline to 1% growth, and growth of 3.2% in 2024.
However, the IMF has already announced that taking into account the better results of the fourth quarter of 2022 and the first quarter of 2023, it leans towards the possibility that GDP growth in 2023 may be at the upper end of this range.
The Ministry of Finance published the Memorandum of Cooperation with the IMF and the Letter of Intent, signed by the senior leadership of Ukraine, on April 5.
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