Monetary Fund, aid to Ukraine for 15.6 billion

Agreement between the IMF and Kiev, a four-year program to support the country

The International Monetary Fund launches a 15.6 billion dollar aid program for Ukraine. “I am pleased to announce that the IMF team has reached a staff-level agreement with the Ukrainian authorities on a 4-year IMF-backed programme, with required access of SDR 11.6 billion (approx. 6 billion US dollars), or 577% of Ukraine’s share. This deal is subject to approval by the IMF Executive Board,” with Council consideration expected in the coming weeks, says Gavin Gray, who led an International Monetary Fund (IMF) team that held discussions in Warsaw with Ukrainian officials, March 8-15, 2023. On the table, a four-year economic program that, subject to approval by the executive board, would be backed by the IMF under the Extended Fund Facility (Eff).

“The staff-level agreement reflects the IMF’s continued commitment to support Ukraine and should help mobilize large-scale concessional financing from Ukraine’s international partners and donors over the life of the programme,” he said.

“In addition to the horrific humanitarian toll, Russia’s invasion of Ukraine – he notes – continues to have a devastating impact on the economy: activity contracted by 30% in 2022, a large share of share capital has been destroyed and poverty levels have increased Serious macroeconomic challenges remain due to the size of the shock and the expansion of the budget deficit The authorities have nevertheless managed to maintain macroeconomic and financial stability, thanks to substantial external support and skillful policy-making”.

“A gradual economic recovery is expected in the coming quarters as activity recovers from severe damage to critical infrastructure, although headwinds persist, including the risk of further escalation of the conflict. The development of a single baseline forecasting scenario under exceptionally high uncertainty it is extremely challenging, as a number of outcomes are plausible. On this basis, staff currently see real GDP growth for 2023 in the range of -3 to +1%,” notes Gray.

“The overall objectives of the authorities’ program are to support economic and financial stability in circumstances of exceptionally high uncertainty, restore debt sustainability, and support Ukraine’s recovery on its path to post-war EU membership. The program was designed in line with the new Fund’s policy on lending under exceptionally high uncertainty and expects solid financing guarantees from donors, including the G7 and the EU”.