Ukraine is allowed to avoid paying billions of hryvnias to the IMF: how to save money

The International Monetary Fund (IMF) has revised the amount of fees for its services to developing countries. This will allow Ukraine to reduce the cost of using the organization's resources by $130 million.

The IMF Executive Board has completed a review of its fee policy, the institution's press service said. As a result, the average amount of fees will decrease by 36%, or about $1.2 billion a year, and the number of countries from which additional fees will be charged will be reduced from 20 to 13 in fiscal year 2026.

According to IMF Managing Director Kristalina Heorhieva, this was achieved by reducing the premium over the SDR interest rate, raising the threshold for additional fees based on the volume of borrowing, reducing the rate of additional fees based on the timing, and increasing the thresholds for commitment fees. The changes will come into force on November 1, 2024.

Vladyslav Rashkovan, Ukraine's Executive Director at the IMF, explained that the cost of IMF resources depends on the dynamics of key interest rates of the world's central banks, and the Fund has limited influence on them. According to him, the IMF's decision will allow the Ukrainian government to save a significant amount of money.

"This decision also has a positive impact on Ukraine: our total annual costs for using IMF resources will decrease by about $130 million. Taking into account future tranches of the IMF under the existing program, the effect for the next 5 years will be $650-700 million. This is not bad, including because the costs for Ukraine are reduced by 38-39%, which is more than for other countries," Rashkovan said.

He predicts that in the future, the IMF's base lending rate will also begin to decline from the highs it has been at over the past year. This will further reduce the cost of the Fund's resources for Ukraine.

OBOZ.UA also reported that by October 21, when the fifth review of Ukraine's Extended Fund Facility (EFF) program will be completed, the IMF Board of Directors will decide on the allocation of a $1.1 billion macro-financial tranche to Ukraine. In total, the EFF program provides $5.4 billion in budgetary assistance to Ukraine in 2024.

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