New Delhi: Ukraine’s economy has shown remarkable resilience in 2023, but challenges remain, notably from the ongoing war and the potential impact of policy measures to address it, the International Monetary Fund (IMF) said Friday.
According to the IMF, Ukraine’s 48-month Extended Fund Facility Arrangement (EFF) has been successful in providing a strong anchor for the country’s economic program, helping to stabilize finances amid extremely challenging circumstances.
The EFF arrangement has remained on track, despite war-related uncertainty, with all but one quantitative performance criteria and all indicative targets for end-December being met.
The IMF has welcomed the Ukrainian authorities’ efforts to mitigate the impact of the war on the economy, noting the growth in 2023, the maintenance of adequate reserves, and the strengthening of financial institutions. However, it has also cautioned against the potential emergence of headwinds in 2024, including a slowdown in growth due to uncertainty about the ongoing war and supply constraints.
The IMF has urged the Ukrainian authorities to remain committed to their reform agenda and to continue implementing measures to strengthen the resilience of the economy to future shocks. It has also highlighted the importance of external financing in ensuring Ukraine’s long-term economic stability.
The ongoing war continues to strain Ukraine’s public finances, and external disbursements on concessional terms are essential to safeguard the country’s macroeconomic stability. However, it is also important to avoid measures that erode the tax base and undermine fiscal sustainability. Reforms to strengthen the frameworks for medium-term budget preparation, fiscal risks, and transparency, as well as an external commercial debt treatment in line with program parameters, are essential to ensure the long-term sustainability of Ukraine’s economy, the IMF said in a press statement.