You're reading: IMF agrees to combine 3rd and 4th SBA tranche, notes high risks due to conflict in Donbas

The Executive Board of the International Monetary Fund (IMF) says that in light of the slight delay in completing the first review of the Stand-By Arrangement (SBA) for Ukraine, it approved the authorities' request for merging the remaining two reviews (the third and fourth tranches) scheduled for 2014, while keeping the total financing under the arrangement unchanged. 

“Overall, economic policies have generally been implemented as agreed in the SBA program, as the Ukrainian authorities have persisted in taking difficult measures despite the volatile political situation. However, the conflict in the eastern part of the country is taking its toll on the economy and society, and compensatory measures will be critical to achieve key program targets agreed for 2014 and beyond,” the IMF said in a statement.

“The program remains highly challenging and continues to hinge crucially on the assumption that the conflict will subside in the coming months,” the statement reads.

Ukraine’s two-year SDR 10.97 billion (about $16.67 billion) SBA was approved on April 30, 2014 to support the government’s economic program, which aims to restore macroeconomic stability, strengthen economic governance and transparency, and launch sound and sustainable economic growth while protecting the vulnerable groups.

Early in May, the IMF transferred the first tranche worth SDR 2.058 billion (about $3.2 billion), with SDR 1.29 billion (about $2 billion) allocated to the Ukrainian government for budget support.

The second-fourth disbursements were originally scheduled for July 25, September 25 and December 15, 2014, respectively, in the sum of SDR 914.7 million each, while the fifth-eighth quarterly disbursements of 2015 will amount to SDR 1.372 billion each. The ninth disbursement of SDR 686 million will be provided in mid-March 2016 if the terms and conditions stipulated in the program are observed.

The IMF mission arrived in Ukraine for the first review of the program on June 24 and worked until July 18. As part of the first review the sides discussed the adjustment of the macroeconomic forecast and the state budget for 2014, including due to the unstable situation in Donetsk and Luhansk regions.

The IMF Executive Board on August 29, 2014, completed the first review of Ukraine’s performance under an economic program supported by a Stand-By Arrangement (SBA).