Ukraine

Ukraine’s track record in macro-stabilization over the last 5 years and under successive Fund programs has been strong, but the goal of robust and inclusive growth remains elusive in the absence of sustained and comprehensive structural reform. Political circumstances were auspicious to address this long-standing challenge, with the President’s anti-corruption platform supported by an unprecedented absolute majority in parliament. However, the outbreak of the COVID-19 pandemic has significantly worsened the outlook and has refocused government policies on containment and stabilization. Uncertainty is large, and the economy is projected to contract sharply as strict containment measures—in Ukraine and globally—led to sizable falls in domestic and external demand. The budget is expected to be hit hard, with a sharp decline in revenues and large emergency spending needs to address the crisis. This, together with the de facto closure of capital markets, has created an urgent balance of payments need.