(Feb 27): The International Monetary Fund (IMF) has approved a four-year financing programme for Ukraine worth about US$8.1 billion.
The IMF’s executive board rubber-stamped the deal on Thursday (Feb 26), following a staff-level agreement reached between the Fund and Kyiv in late November. The decision allows for the immediate disbursement of about US$1.5 billion.
“Ukraine and its people have weathered a long and devastating war for over four years with remarkable resilience,” Kristalina Georgieva, IMF managing director, said in a statement Thursday. The “arrangement aims to preserve the hard-won macroeconomic and financial stability, as well as to extend and deepen structural reforms as the war continues.”
The IMF’s decision should be a relief to Ukraine amid difficulties on the battlefield and US pressure to make concessions in peace talks with Russia. However, it comes as Hungary holds up a €90 billion (US$106 billion) European Union loan package to Ukraine.
Despite Hungary’s block, European Commission president Ursula von der Leyen said that Kyiv would receive the funds “one way or another” during a visit to Kyiv this week to mark four years since Russia launched its full-scale invasion.
Georgieva said risks to the IMF arrangement “are exceptionally high”.
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“The success of the programme will depend not only on continued support by the international community to help close fiscal and external financing gaps and restore debt sustainability, but also the authorities’ steadfast determination in implementing ambitious structural reforms and readiness to undertake additional measures if needed,” she said.
Donors’ support is key for Ukraine, as the IMF calculated a financing gap of around US$136.5 billion over the programme period. This is the second IMF programme for the country since Russia’s invasion of Ukraine.
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