Ukraine and the IMF: working on mistakes

Mariia Mygal

38 billion dollars is the amount of money Ukraine will need to cover the state budget deficit in 2023. Of course, the reason for the shortage of such a huge amount of funds is the full-scale war in our country. The government plans to finance the deficit with the help of military bonds and support from foreign partners, including the IMF.

However, whether Ukraine will receive the agreed amount of assistance from the IMF in the future will depend only on the effectiveness of Ukraine’s implementation of programs with the Fund.

In order for Ukraine to receive critical financial assistance in full in future cooperation with the IMF, it is necessary to work on the mistakes of previous programs. To do this, let’s look at the level of fulfillment of Ukraine’s obligations under the last three programs*.

Since 2015, Ukraine has been receiving assistance from the IMF under the Extended Fund Facility (EFF) and Stand-By Arrangement (SBA) programs. Each of these programs required the Ukrainian side to fulfill certain conditions, including
“structural beacons” are reform measures that are crucial for achieving the program objectives and serve as markers for assessing its implementation;
preliminary measures are steps that the country undertakes to take before the IMF approves financing or completes the program review.

However, under none of these programs have the commitments been fully fulfilled, which is why our country has lost about $12 billion. In addition, Ukraine is on the list of countries that pay additional surcharges. According to experts, such surcharges increase the cost of paying for an IMF loan by almost 61%.

So, in what aspects did our country fail to fulfill its obligations to the IMF?

The 2015 Extended Fund Facility program

Prior to the launch of this program, Ukraine initiated the cancellation of the previous one. This request was justified by the fact that the Ukrainian side was unable to fulfill the obligations agreed with the Fund due to the conflict in the East of Ukraine caused by the aggression of the Russian Federation.

The IMF granted the request and approved a new agreement under the Extended Fund Facility program in the amount of about $17.5 billion (SDR 12.3 billion). The agreed amount under this program is the largest in the history of relations with the Fund. In return, Ukraine received only about $7 billion (SDR 6.2 billion).

*Financial assistance provided in March 2022 under the Rapid Financing Instrument (RFI) was not included in the analysis, as it is an emergency response instrument and does not provide for the implementation of programmatic economic measures by the Ukrainian side

The 2015 EFF program included 19 prior actions and 38 structural beacons. Most of them concerned fiscal policy, the energy sector, and the fight against corruption.

Out of 38 structural benchmarks, only 34% of the total number were implemented on time, 45% were not implemented on time, and 21% remained unimplemented by the end of the program. Overall, Ukraine has completed almost 79% of the structural benchmarks of the total number (albeit late).

As a result, 6 structural benchmarks from this program were moved as a preliminary measure to the next Memorandum, and the deadline for another 9 benchmarks was postponed.

Analyzing the total number of structural benchmarks that were not implemented or implemented late, almost half of them are measures that required the VRU to adopt certain laws. These include legislation on the creation of a new civilian service responsible for investigating financial crimes to replace the current tax police, the adoption of legislation expanding the legal capacity of the NABU, the adoption of a law on the turnover of agricultural land, etc.
If we analyze the status of implementation of the structural lighthouses by executors, the Ministry of Finance was assigned the most tasks. This is quite an expected result, given that almost 30% of the structural beacons in the entire program concerned fiscal policy.

In practice, there is a situation where the Ministry is the main executor of a task that requires the adoption of a law, which is the responsibility of the Parliament. This explains the fact that all structural beacons that were not fulfilled or fulfilled on time under the Memorandum provided for the adoption of the necessary law.

However, it is impossible to conduct a full analysis in the context of the executors under this program. According to the information received from the Ministry of Finance, action plans for the implementation of memorandums with the IMF began to be developed in 2017, so data is available only for one of the four memorandums of the 2015 EFF program.

SBA program in 2018

The situation is repeating itself – Ukraine is approaching the IMF with a proposal for a new program and a decision to cancel the previous one. The reason is identical – the goals of the previous program (2015) are unattainable by the end of its term.

The IMF Executive Board again grants the request and approves a new agreement under the Stand-By Arrangement program. The amount of the agreement was about $3.9 billion (SDR 2.8 billion), but we received only about 1.4 billion (36%).  

The SBA’s 2018 program included 3 prior actions and 8 structural beacons. 

Almost half of them were related to changes in the financial sector, while the rest were related to energy sector policies, anti-corruption, and fiscal policy. Unlike the previous program and the 2020 program, the Memorandum of 2018 does not contain structural pillars aimed at reforming state-owned enterprises and changes in the judicial system. 

The results of the implementation of structural beacons under the 2018 SBA program look quite successful, as 75% of the total number were completed in a timely manner. Only one task was not completed by the Ukrainian side at all, and another was not completed on time. 

The main implementers of this program are the NBU and the Ministry of Finance. This is quite logical, given that 45% of the measures related to financial sector policy. Other government agencies (MinRegion, Ministry of Justice and NABU) had only one structural beacon each. In general, all program implementers coped with the implementation of their tasks quite well

SBA Program 2020

The IMF Executive Board approves a new 18-month program for Ukraine under the Stand-By Arrangement. The loan amount was approximately $5 billion (SDR 3.6 billion) for balance of payments and budget support. Again, Ukraine received only about $2 billion (36%). 

In the Memorandum, the Ukrainian side says that, like most countries, it has suffered significant losses caused by the COVID-19 pandemic. The new program was supposed to help cover the urgent needs of Ukraine’s balance of payments and budgetary needs to support the response to unforeseen crisis situations. 

Ukraine successfully passed the first of four reviews. At the same time, a decision was made to disburse the second tranche and extend the program. 

The 2020 SBA program included 12 prior actions and 22 structural beacons to be implemented by Ukraine. 

60% of them related to changes in the financial sector and fiscal policy, while the rest were beacons aimed at fighting corruption and changes in the energy sector. 

It is not possible to analyze the measures in full in terms of implementation, as some of the structural beacons were implemented between February 2022 and May 2022. In March 2022, due to the war with Russia, the Ukrainian authorities canceled the current agreement with the IMF and announced their intention to return to cooperation to develop an appropriate economic program aimed at recovery and growth whenever possible.

Thus, analyzing the structural beacons that were due by February 2022 (there were 17 of them), it was determined that only 41% of their total number were implemented on time. Instead, 47% of the measures were not completed on time or not at all.

Long delays in the implementation of certain beacons required the Ukrainian side to shift the deadlines or to transfer the unimplemented beacon to the next Memorandum as a preliminary measure. For example, two of the 17 beacons were moved to the next Memorandum as preliminary measures.

The Ministry of Finance had the largest number of tasks (41% of the beacons related to financial policy). The share of tasks of the Ministry of Justice reached 13%. Other agencies had only one or two structural beacons to implement. 


The analysis of the last three IMF programs showed that Ukraine did not receive about $12 billion. The reason was that the Ukrainian side failed to successfully pass all reviews under any of the programs and fulfill its obligations to the IMF.

In total, under the last three programs, Ukraine and the IMF agreed to implement 68 structural benchmarks. Of these, 43% of the tasks were completed on time, while the remaining 57% were either not completed within a particular program or were not completed on time. 

If we include the structural benchmarks that were not implemented on time (but were eventually implemented), the percentage of completed measures is almost 82%. 

What should Ukraine work on to fully fulfill its obligations and eventually receive the agreed amounts from the IMF? We have compiled a list of proposals that we recommend the Government take into account to improve the level of fulfillment of agreements with the IMF:

  • When agreeing on the obligations to be fulfilled by the Ukrainian side, prioritize measures and determine their step-by-step implementation stages, which are pragmatically assessed in terms of time (the principle of “promise less – do more”).
  • Discuss and search for a model or method that would involve a parliamentary representative(s) in the process of concluding agreements with the IMF in order to increase the effectiveness of fulfilling Ukraine’s commitments under IMF programs. 
  • Develop, implement, and publicize a policy on the procedure for attracting and using IMF funds, as well as monitoring the fulfillment of obligations assumed by the Ukrainian side. The policy should, among other things, provide for the publication of the data sets specified in proposal 4.
  • To develop a web portal (dashboard) to publish information on Ukraine’s obligations under the current IMF agreement and those responsible for their fulfillment, proposed measures under the future IMF program and the potential consequences of their implementation, the timing and status of fulfillment of obligations, the amount of payments to the IMF by year, and other important data. 
  • Support the revision of the IMF policy on surcharges with a view to suspending them (at least for the period of war and post-war recovery) and then canceling them by publicly communicating Ukraine’s official position on the surcharge policy.

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