IMF notes signs of economic stabilization in Ukraine, says banking system recovery is key to growth
The Ukrainian economy is showing signs of stabilization, however to restore economic growth it is crucial to continue the current balanced policy and structural and institutional reforms, the International Monetary Fund (IMF) has said.
"The Ukrainian economy remains fragile, but encouraging signs are emerging. In recent months, the exchange rate has stabilized, domestic-currency retail deposits have been increasing, and the pace of economic decline is moderating. Continued prudent policies and further reforms should allow the economy to turn the corner and growth to resume in the period ahead," the IMF press service reported, citing IMF First Deputy Managing Director David Lipton who was speaking after the IMF Executive Board's discussed the issue of the second tranche of the EFF program for Ukraine.
"Restoring a sound banking system is the key for economic recovery. To this end, the strategy to strengthen banks through recapitalization, reduction of related-party lending, and resolution of impaired assets should be implemented decisively," he said.
"Maintaining an appropriately tight monetary policy and building up official foreign exchange reserves will be critical to entrenching external stability and anchor inflation expectations. As disinflation takes root, monetary policy can be carefully eased to support economic activity. Removal of administrative measures on foreign exchange operations should proceed in a gradual and sequenced manner, once the enabling conditions are in place," Lipton said.