MF to announce $15.6bn loan program for Ukraine

A four-year IMF loan program worth $15.6 billion for Ukraine is being finalized. According to a source close to the negotiations, an announcement is “imminent”.

Multilateral lenders have been pressured to put together a comprehensive aid package for the country that has been economically devastated since February 2022’s invasion by Russia. According to the person, an announcement would be made within a few days.

The IMF released a statement Wednesday affirming that discussions on policy with the Ukrainian authorities took place in Warsaw (Poland) between March 8-15.

“The discussions between IMF staff members and the Ukrainian authorities were productive. Very good progress was made towards agreement on a set policy that could underpin fund-supported programmes,” stated Vahram Stepanyan (the IMF’s resident representative in Ukraine). Staff and authorities are expecting to complete the discussions within the next few days, based on the progress made.

Chief economist of Kyiv-based Dragon Capital investment bank, Olena Bilan, stated that the new IMF program is essential, along with multibillion dollar financing from other partners, including the US, EU, and EU, to help Ukraine “bridge the huge budget funding gap caused by Russia’s invasion”.

Bilan stated that the government is seeking $43bn external budget support in this year’s budget amendments. This figure adds to $32bn for 2022.

“While the IMF may only provide $4bn to $5bn in funding this year, it is a small fraction of the total funding requirements, the programme will anchor the government’s policies and demonstrate broad support for Ukraine, which will allow them to secure sufficient financing from other partners.

According to the World Bank, more than half the country’s infrastructure was destroyed by Russian strikes. This has exacerbated the economic crisis in Ukraine.

Initial discussions had indicated that the loan amount would be between $14bn and $16bn.

In December, the IMF approved a four month programme for Ukraine that aims to strengthen the economy and prepare it for a loan from the fund.

According to the figures released Wednesday by Ukraine’s Finance Ministry, the country has received approximately $25bn in funding support for its budget from the US, EU and other countries since Russia launched its full-scale invasion of the country in February 2022.

Since the start of the war, Ukraine has received over $38bn in financial aid from international countries and financial institutions.

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