The board of directors of the International Monetary Fund (IMF) on Friday approved a four-year, SDR11.6 billion ($15.6 billion) extended EFF program as part of a total support package for Ukraine of $115 billion, the Fund said in a statement.
“The Ukraine program (for 2023-2027), supported by the EFF, aims to anchor policies to maintain fiscal, external, price and financial stability and support economic recovery, while improving governance and strengthening institutions to promote long-term growth in the context of post-war recovery and Ukraine’s path to the EU,” the IMF said.
The Fund specified that the decision of the board of directors allows for immediate disbursement of about SDR2 billion (or $2.7 billion).
IMF mission chief Gavin Gray clarified to reporters that the first review of the program is expected in June-July this year, the second by the end of October, possibly in early November, and from 2024 will be quarterly.
According to the release, EFF approval is expected to attract large-scale concessional financing from international donors and Ukraine’s partners to help resolve Ukraine’s balance of payments problem, achieve medium-term external viability and restore debt sustainability on a prospective basis in both baseline and negative scenarios.
The IMF notes that in view of the exceptionally high uncertainty faced by Ukraine, the EFF program envisages a two-stage approach. In the first phase of the program, scheduled for 2023-2024, the focus will be on three goals. These include, among others, strengthening the 2023 budget and supporting revenue mobilization, including by avoiding new measures that could undermine tax revenues.
In addition, it is about sustainable disinflation and exchange rate stability, including by maintaining sufficient foreign exchange reserves, and promoting long-term financial stability, including by preparing a more in-depth assessment of the banking sector and further strengthening the independence of the central bank.
“Independent and effective anti-corruption institutions will help reduce corruption risks during martial law and build public and donor confidence in future reconstruction,” the Fund adds.
He also noted that the first phase of the program will protect social spending.
“The second phase of the program will shift the focus to more ambitious structural reforms to strengthen macroeconomic stability, support early post-war recovery, and enhance resilience and higher long-term growth, including in the context of Ukraine’s EU accession goals,” the IMF pointed out.
According to the release, Ukraine is expected to return to its pre-war policy fundamentals, mainly a flexible exchange rate and inflation targeting, while improving productivity and competitiveness, strengthening institutions and addressing financial and energy sector vulnerabilities.
In addition, fiscal policy will focus on critical structural reforms to guarantee medium-term revenues by implementing a national revenue strategy, along with improving public financial management and introducing public investment management reforms to support postwar recovery.
“The risks to the EFF program are exceptionally high. The success of the program depends on the size, composition and timing of concessional external financing to help close the budget deficit and external financing and restore debt sustainability on a forward-looking basis under baseline and negative scenarios,” said First Deputy Managing Director Gita Gopinath.
IMF Chief of Mission Gavin Gray specified that besides $15.6 billion from the Fund, the support package implies $80 billion from multilateral and bilateral donors, of which $20 billion in grants and $60 billion in concessional loans, as well as another $20 billion in deferred external debt payments.
According to him, the baseline scenario assumes the completion (winding down) of the war in mid-2024, while the negative scenario – by the end of 2025 with an increase in financing needs up to $240 billion.
At the same time, the IMF representative stressed that the program provides additional guarantees from a number of shareholders of the Fund, as preferred creditors, in particular the G7 countries, Belgium, Lithuania, the Netherlands, Poland, Slovakia and Spain.
Ukrainian President Volodymyr Zelensky reported about the hour-long conversation with his French counterpart Emmanuel Macron.
“In an hour-long conversation with Emmanuel Macron we substantially and effectively discussed the defense cooperation between Ukraine and France. Informed in detail about the situation on the front. We dwelled on the further steps for the implementation of the Peace Formula. Coordinated actions in the context of the nearest international events”, – reported in Telegram channel Zelensky on Saturday.
Leaders of five Central and Eastern European countries have urged the European Commission to take action in connection with a surplus of grain and other Ukrainian food on their territory, the Associated Press reported from Warsaw.
“We call on the European Commission to study the possibility of buying accumulated grain from EU member states bordering Ukraine for humanitarian needs,” reads a letter addressed to EC President Ursula von der Leyen on behalf of the prime ministers of Poland, Slovakia, Hungary, Romania and Bulgaria.
“We also reiterate our call for financial support from the EU to accelerate the development of transport infrastructure (for the export of grain – IF),” it says.
It is pointed out that such products remain on the shelves of these countries in excess, reducing prices, and do not reach the countries that are ready to buy them outside the EU.
The European Commission earlier said that it intended to quickly launch an assistance mechanism for countries that faced an influx of Ukrainian products.
Reinstating the obligation for officials to file asset and income declarations in the coming months is one of the conditions of the $15.6 billion expanded EFF financing program approved by the International Monetary Fund (IMF) for Ukraine on Friday, Fund mission chief Gavin Gray said.
“Under the program, the authorities are committed to a targeted recovery of asset declarations even in the current circumstances. We see this as an important measure…,” he said at a briefing Friday.
Gray specified that the IMF will work with the authorities on this issue in order to resolve it by the first review of the program in June-July this year.
As reported, in February this year, the ambassadors of G7 countries in Ukraine expressed hope that the Verkhovna Rada will soon resume the system of electronic declaration of assets and income of officials, which was suspended during martial law, which “will prevent corruption and strengthen citizens’ trust in government.
Chairman of the National Agency for Combating Corruption (NACC) Oleksandr Novikov said in mid-March that he expects the resumption of declarations in the next two months, but believes that the public part of the register of declarations should remain hidden until the end of the war.
According to him, all public authorities have access to the data of the register of declarations and the data they need to perform their official duties.
Declarations for the year 2022 filed about 6% of declarants. For 2021 – up to 50%, including two deputy heads of the presidential office, the Minister of Education and Science, the Minister of Defense, 28 people’s deputies, five heads of regional military administrations and 163 judges.
26 risk insurers and one life insurer will leave the insurance market of Ukraine in 2022, according to a review of the non-banking financial sector, published on the website of the National Bank of Ukraine (NBU).
According to the NBU, in the fourth quarter of 2022 the volume of gross premiums of life insurance companies increased by 9%, while the risk insurance, on the contrary, decreased by 8%.
In general in 2022 the volume of premiums on life insurance decreased by 17%, and risk insurance – by 21%. At the same time, insurers’ payouts were almost unchanged, for the quarter. At the same time for the year for life insurance premiums increased by 7%, risk insurance – decreased by almost a third.
The share of premiums on motor insurance (Casco, CMTPL and Green Card) in 2022 increased by 10 p.p. – to 49%. In particular, the volume of premiums “Green Card” more than doubled compared to the previous year, and payments almost by a third. At the same time, premiums for property insurance and insurance of financial risks more than halved, and their payments decreased by 62%.
The volume of gross premiums ceded in reinsurance, for the year decreased by more than two times, and reimbursements – almost 60%. For the fourth quarter, premiums to reinsurers decreased by 36%, and reimbursements – by 40%.
The NBU notes that the total amount of reserves for losses of insurers remained almost unchanged for the quarter, but had different dynamics in relation to separate types of insurance: for voluntary types the reserves for losses slightly decreased by 7% in comparison with the third quarter; for compulsory types – increased by 10% in comparison with the previous quarter. In annual terms, reserves for losses on both voluntary and compulsory types of insurance increased by 36%.
Investment income of risk insurers in 2022 increased almost one and a half times compared with the previous year. Most of this income was interest on bank deposits. However, the growth of investment income could not cover the increase in operating expenses. The operating efficiency ratio increased to 88%.
In the fourth quarter of last year, one of the life insurance market leaders reclassified investment income, resulting in a significant decrease. Excluding this company’s data, life insurers’ investment income increased 30% year-over-year and 12% quarter-over-quarter. Deposit income was up 36% to the previous quarter, while income from investments in GSEs remained flat.
Risk and life insurers ended the fourth quarter with a small loss, but both groups were fairly profitable for the year.
Return on equity for risk insurers was 15%, and for life insurers – 13%.
For the fourth quarter of 2022, life insurers’ assets increased 3%, and for all of 2022, they increased 18%. Assets of risk insurers declined slightly over the quarter, but rose 6% for the full year.
As of January 1, 2023, seven insurers had violated at least one of the solvency and capital adequacy and transaction risk ratios.
PrJSC Centravis Production Ukraine, part of the holding Centravis Ltd, in 2022 exported 11.6 thousand tons of seamless stainless steel tubes to 46 countries, reducing shipments in kind by 33% compared with the previous year.
According to the company’s press release on Friday, its revenue last year was EUR125.8 million, down 9% from 2021.
At the same time, it is explained that the decrease in supplies is due to the beginning of a large-scale war and all the consequences caused by the conduct of military operations in Ukraine. In particular, the need to restructure logistics, power shortages, shelling, etc.
At the same time Centravis has kept high volume of production at its main plants and enters top-10 of the largest world manufacturers of seamless stainless tubes, the press release says.
It is also noted that according to Forbes magazine rating, Centravis company (Nikopol, Dnepropetrovsk region) was included in the 50 largest exporters of 2022 – the companies, which, according to the magazine editorial board, “gave the opportunity to the Ukrainian economy to survive”.
“Last year we supplied pipes to 46 countries of the world. Each delivery is a separate story, because after the beginning of the brutal Russian aggression we had to convince our partners that our team is able to fulfill all our obligations. We have adapted, become more stable and continue to develop the company, increase export and support the Ukrainian economy”, – General Director of “Centravis” Yuriy Atanasov said, who is quoted by the press service.
It is specified that “Centravis” delivered more seamless stainless tubes to Germany, Italy and the United States. The greatest demand was for general tubes and pipes for general purposes – 37% of total exports, pipes for machining – 25%, as well as tubes for tool and automotive segments – 24%.
As we reported earlier, in February this year the company opened new production in Uzhgorod, which specializes in tool tubes for the world’s leading automotive brands (Volkswagen, Audi, BMW, and Chevrolet). The total investment amounted to more than 2.7 million euros. The new plant has about 100 employees, but this year it is planned to expand and build the second stage.
“Centravis was founded in 2000 and is among the ten largest manufacturers of seamless stainless steel tubes in the world. Its main production capacities are located in Nikopol (Dnepropetrovsk region). In 2022 the company has realized a number of large-scale orders for such world companies as Benteler Automotive, LINSTER Edelstahlhandel, Rohr Mertel, Buhlmann Group, Webco, MRC. The company employs more than 1400 people.
Holding Centravis Ltd. was created on the base of Nikopol Stainless Tube Works CJSC, service and trade companies Industrial and Commercial Enterprise Yuvis Ltd. Its shareholders are members of the Atanasov family.
Centravis Ltd. owns 100% of shares of Centravis Production Ukraine PJSC.
