Statement by Prime Minister of Ukraine Arseniy Yatsenyuk following the negotiations with the IMF mission

There has just wound up a meeting of the Cabinet of Ministers of Ukraine. The Government of Ukraine approved the draft Memorandum between Ukraine and the International Monetary Fund.

I remind that the previous year we had a yearly Stand-By program with the International Monetary Fund, and the whole list of reforms envisaged in the program was implemented by the Ukrainian Government. However, as a result of the Russian military aggression and aggravation of the situation in the East of Ukraine we appealed to our western partners and the International Monetary Fund to extend financial support to Ukraine.

We appeal to the International Monetary Fund with a request to the Board of Governors of the International Monetary Fund to approve a four-year cooperation program with Ukraine. It is an Extended Fund Facility, which will enable Ukraine during four years to obtain a financial support worth about USD 25 billion, with USD 17.5 billion out of the sum as the finance to be provided by the International Monetary Fund to Ukraine to stabilize the financial situation within the country.

Throughout these four years Ukraine will be carrying out the reforms, vital to ensure the economic and financial stability of the state. This reform program is not for the IMF, it is a program for reforms in Ukraine. The program is aimed to restore economic growth. We expect in case the program succeeds and the Russian military aggression stops, in 2016 the Ukrainian economy will start growing.

The program envisages a number of important, hard, but effective solutions: in economy management, curbing corruption, restoring order in the energy sector, optimization and cutting public spending, increasing up to 3% of GDP expenditure on investment, reducing the quantity of government officials, equity in a pension reform, and first of all, we are talking about the reduction and elimination of the so-called special pensions.

Moreover, the Government plans a broad program of assistance to low-income population layers. At the end of the current year (starting in December) the Government will carry indexation of monetary incomes of the population. The program envisages the need for indexation or increasing incomes of the population depending on the level of prices throughout the duration of it being in effect.

Besides, the program provides for an assistance worth UAH 12.5 billion (only in the current year) to the low-income citizens depending on the changes in prices and tariffs, primarily for energy carriers.

We expect that the Board of Governors of the International Monetary Fund on completion of the negotiations with the IMF, the formal talks have been already completed by us, will approve the aforesaid program, and Ukraine will have access both to financial resources of foreign lenders and financial resources of private investors.

Another program’s objective is stabilization of the banking system and the exchange rate, as renewed confidence in Ukraine, if the four-year program is adopted, will serve as a serious factor to stabilize the currency exchange rate and an objective and strong banking system of Ukraine, which will also contribute to the Ukrainian economy’s growth.

The Ukrainian Government has completed the talks. I reassure you that the political forces of the Pro-European coalition in the Ukrainian Parliament bear a joint responsibility to the people of Ukraine for the efficiency of reforms.

These are the reforms much needed for the country. To ensure implementation of these reforms, outlined in the Memorandum between Ukraine and the International Monetary Fund, our foreign partners will provide financial assistance.

The situation is difficult. The sum of USD 40 billion, which were received by the regime of Viktor Yanukovych in the shape of loans, we now should return – and it is an excessive burden on the State Budget. But due to our consecutive efficient activity work in the framework of the four-year program with the International Monetary Fund, we believe that 2016 will become for Ukraine a year of stabilization and economic growth. And now it depends on the parliamentary coalition, the Government and the whole country, how fast and effective we are capable to introduce crucial reforms for the country.

The negotiations have ended. We expect only a formal decision of the Board of Governors of the International Monetary Fund.