The International Monetary Fund's executive board on Thursday completed its first review of Ukraine's $15.6 billion loan program, allowing Kyiv to immediately withdraw $890 million for budget support as it mounts a major offensive against Russia's invasion.
The board's approval brings Ukraine's withdrawals under the program launched on March 31 to around $3.6 billion so far.
The IMF said Ukrainian authorities have made "strong progress" toward meeting reform commitments under "challenging conditions," meeting quantitative performance criteria through April and structural benchmarks through June.
"Russia's invasion of Ukraine continues to have a severe impact on human and physical capital, and the environment, with loss of life, drop in living standards and rise in poverty, as well as damage to infrastructure," IMF Managing Director Kristalina Georgieva said in a statement.
"Nevertheless, the Ukrainian people have been resilient, and the authorities' skillful policymaking and continued external support have helped support macroeconomic and financial stability," Georgieva added.
IMF Ukraine mission chief Gavin Gray told reporters the IMF is continuing to study the social, environmental and economic impacts of the destruction of the Kakhovka Dam earlier this month, which caused widespread flooding in southern Ukraine.
Gray said the IMF initially expects the disaster to increase food prices and push up inflation in the country.
Nonetheless, the IMF reiterated the 2023 Ukraine economic forecast, recently upgraded to growth of 1% to 3%, from a March forecast range of a 3% contraction to 1% growth, as the new loan program underpins the economy.
The IMF loan program, approved under new rules that allowed lending into a highly uncertain situation, forms part of a total $115 billion package of support, with $100 billion coming from donor governments.
The IMF expects to carry out its next review of Ukraine's program in late November or early December, the official added.
The IMF said it was important for Ukraine to continue its reform momentum, including strengthening its tax compliance, with new tax legislation expected in July, and to build a strong 2024 budget based on available resources.
Gray said Ukrainian authorities also needed to continue work on strengthening governance and fighting corruption, with new legislation passed by the end of September.
"These measures are important because their strategy of mobilizing resources for reconstruction requires private sector investors to be convinced that there is a level playing field in Ukraine, and for official donors to be convinced that their resources will be appropriately spent," Gray added, Reuters reports.
