The IMF Programs: Countries’ Experiences and the Implications and Prospects for Ukraine

Abstract

The IMF is the world’s leading institution for promoting global economic and financial stability. Unlike other IFI’s, the Fund isn’t an ordinary lending institu- tion. The IMF holds a pool of member-countries’ currencies and an amount of its own foreign reserves and uses this money to provide credit to members when they face economic and financial difficulties or expect them in the near future. A country contributes to the Fund according to a quota based mainly on its relative position in the world economy, including its GDP, trade, inflows of capital and re- serves. The Fund’s quota-based money holdings may be supplemented by Gen- eral Resources Account (GRA) borrowing in case of exceptional needs by the member states. The subject of the article consideration is the new loan toolkit of the Fund, which evolved together with the development of the international financial sys- tem. The acceleration in the modernization of the lending toolkit took place after the 2008 global financial crisis. It corresponded to an increase in the financial needs of some of the member states and focused on safeguarding the Fund’s resources. With modification of existing lending instruments, such as the Stand- By Arrangements (SBA) and the Extended Fund Facility (EFF), new ones were introduced, including the Flexible Credit Line (FCL), the Precautionary and Li- quidity Line (PLL) and Rapid Financing Instruments (RFI). The IMF also provides loans to a group of poor countries on concessional terms that include zero interest rates, with the goal of promoting sustainable eco- nomic growth and reducing poverty in these countries. The purpose of the article is to formulate the main directions of the neces- sary structural reforms in Ukraine based on the method of comparative analysis of IMF program results in different countries.