Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva stated about possible risks of the implementation of the Stand-By credit program approved for Ukraine as the Fund reported.
“The risks to the new program are very large. The uncertainty about the severity and length of the global downturn is exceptionally high. On the domestic side, uncertainty about the direction of economic policies remains substantial,” Georgieva noted.
She expressed such concern due to the fact that Ukraine’s public debt remains high, as well as the need in the governmental financing. According to the IMF head, the fiscal policy within the program will aim to deal with the consequences of the crisis; however, it should be tightened in process of the restoration of the economy to reduce the public debt.
Due to this, Georgieva announced the number of recommendations for the successful implementation of Stand-By credit program for Ukraine:
- the independence of the central bank should be preserved;
- the monetary policy and policy of the exchange rate should provide stable support in the context of the regime of inflation targeting, allowing to regulate the exchange rate and prevent the pressure on liquidity’
- the financial policy should provide the balance between preservation of the financial stability and assistance for restoration of the economy.
“Full and timely implementation of policies under the Fund-supported program will be critical to mitigate economic risks and lay the ground for stabilization and recovery,” Georgieva underlined.
As we reported, the Executory Board of the International Monetary Fund approved the 18-month-long stand-by funding program for Ukraine. The Ukrainian government will, thus, get access to 3.6 billion SDR (about five billion dollars).