Cooperation of Ukraine with international financial institutions
International Monetary Fund
The International Monetary Fund is an international financial organization established in 1944. The IMF consists of 188 member-states. The Fund has the status of a specialized UN agency and its purpose is to regulate monetary cooperation of the member states and to provide the assistance in the balance of payments deficit by rendering short- and medium-term loans.
Ukraine became an IMF member-state according to the Law of Ukraine “On Ukraine's accession to the International Monetary Fund, International Bank for Reconstruction and Development, International Finance Corporation, International Development Association and the Multilateral Investment Guarantee Agency” of June 3, 1992.
Ukraine has been actively cooperating with the IMF since 1994 by using its financial and technical resources to achieve macroeconomic stability and to build up the necessary conditions for economic reforms. Such cooperation had been mainly carried out in the framework of 8 joint programs – STF (systemic transformation facility), “Stand-By” (stabilization loan), EFF arrangement (loan to support development), precautionary “Stand-By”.
The Government of Ukraine requested the IMF to start negotiations on the preparation of the new loan agreement between the Fund and Ukraine in February 2014 after two years break in relations. On April 30, 2014 the IMF Executive Board approved a new joint program "Stand-By" for the next 2 years, allocating for Ukraine the amount of $17.1 billion. In this connection Ukraine received two tranches: 3.2 billion USD in May and 1.4 billion USD in September 2014.
The agreement to expand financial support for Ukraine by replacing the existing IMF “Stand-By” program for the long-term EFF program was achieved in January 2015.
The Executive Board of International Monetary Fund made a decision on the transition to the long-term EFF program allocating for Ukraine $17.5 billion on March 11, 2015. This four-year Program provides support for the economic and financial stability in Ukraine. The first tranche in the amount of $5 billion entered Ukraine in March 2015. The decision to allocate for Ukraine the second tranche in the amount of $1,7 billion (EFF program) was made during the regular meeting of the IMF Executive Board held on July 31, 2015.
World Bank Group
The World Bank Group was established on December 27, 1945 to render a financial and technical assistance for the developing countries. The World Bank is a join-stock company with the 186 member-shareholder states. Ukraine became a member of the World Bank Group in 1992, under the Law of Ukraine dated June 3rd , 1992 №2402-XII. Ukraine as a member-shareholder of the World Bank has 0.77% of the equities.
Among the international financial organizations, the World Bank is the second lender of Ukraine after the IMF. The resources of this organization are used to maintain public budget, the implementation of institutional and structural reforms, preparation and realization of the long-term investment projects meeting the priority directions of the economic development of Ukraine.
Cooperation with the World Bank is based on Country Partnership Strategy for Ukraine for 2012-2016 adopted in February 2012. The Strategy aimed at the assistance to the Government in implementation of the economic reforms and EU integration.
Over the years of cooperation Ukraine received $7,4 billion from 50 loans of the World Bank totally allocating $10,1 billion. The greater part of these loans was directed for the structural reforms, financial sector reforms and further development of the banking system.
The Board of Directors of the World Bank adopted a decision to provide additional loan of $3 billion to support the reforms in our country on March 10, 2014.
12 projects are being realized at the moment. They aimed to improve the infrastructure, roads and traffic safety, power transmission as well as to rehabilitate hydropower stations, to develop urban infrastructure and energy efficiency including the district heating sector, to modernize the system of population social support and health care system.
European Bank for Reconstruction and Development
The EBRD is an international financial organization aimed to finance economic reforms in Eastern Europe. The EBRD activities is directed to facilitate in the issues of transition to a market economy in this region. The Bank was founded in 1991. Today 65 states are members of the EBRD. Ukraine is a member of the EBRD since August 1992 under the Decree of the President of Ukraine "On Ukraine's membership in the European Bank for Reconstruction and Development" of July 14, 1992, №379.
The EBRD operates only on a commercial basis. The bank provides only purpose loans for specific projects to private and public institutions for the economic development (60% of loans allocated for the private and 40% - allocated for the state sectors).
The EBRD is the Administrator of two international funds - the Nuclear Safety Account and the Chernobyl Shelter Fund. These Funds are financing international technical assistance projects for the preparation of the Chernobyl NPP decommissioning and conversion of object "Shelter" into an environment friendly system.
There are key projects in the public and municipal sectors in Ukraine, the EBRD had planned to finance at present:
- The project of building the Pan-European Corridor for the benefit of "Ukravtodor" (with appropriate parallel financing by the European Investment Bank);
- Expansion of the Trade Facilitation Programme that enables Ukrainian banking institutions to confirm through the EBRD an appropriate trade documentary tools;
- The project of gas compressor stations’ modernization on the pipeline Urengoy-Pomary -Uzhgorod (with the parallel financing by the European Investment Bank);
- The number of projects in the municipal and energy saving sector in the framework of the “Eastern Europe Energy Efficiency and Environment Partnership” (E5P) programme.