The International Monetary Fund announced on Friday that its executive board had approved a four-year, $15.6 billion loan program for Ukraine as part of a larger, $115 billion international aid package to assist the nation in meeting its immediate financial needs as it fights Russia’s 13-month invasion.
According to a statement from the Fund, the decision opens the door for an immediate release of around $2.7 billion to Kyiv.
The Extended Fund Facility (EFF) loan is the first significant financing plan that the IMF has authorized for a nation engaged in a protracted conflict. The last $5 billion IMF program for Ukraine ended last year.
IMF First Deputy Managing Director Gita Gopinath stated in a statement that “Russia’s invasion of Ukraine continues to have a catastrophic economic and social effect.”
Despite this, she said, Ukrainian authorities “have still been able to retain general macroeconomic and financial stability, due to adept policies and significant external help.”
The decision formalizes a staff-level agreement between the IMF and Ukraine that was reached on March 21 and takes into account Ukraine’s future path toward EU membership.
Volodymyr Zelenskiy, the president of Ukraine, welcomed the additional cash.
He said on Twitter, “It is a crucial tool in our struggle against Russian aggression.” “We help the Ukrainian economy together. And we’re making progress toward triumph! ”
Large-scale funding for Ukraine is anticipated to be released as a result of the deal from international partners and donors, including the World Bank and other lenders.
According to an IMF representative, the $115 billion package consists of a loan from the IMF, $80 billion in promises for grants and loans from other nations, and $20 billion in debt reduction obligations.
A two-step debt treatment process for Ukraine that includes adequate financing assurances on debt relief and concessional financing during and after the program is supported, according to the IMF, by a number of stakeholders, including international financial institutions, private sector companies, the majority of Ukraine’s official bilateral creditors, and donors.
The EFF arrangement has “exceptionally significant risks,” according to Gopinath. “The amount, content, and timeliness of external borrowing on concessional terms to assist address fiscal and external funding gaps and restore debt sustainability on a forward-looking basis” are all critical factors in the program’s success.
