IMF approves $1.4bn emergency support for Ukraine
The International Monetary Fund has approved $1.4bn in emergency financing for Ukraine to help meet urgent spending needs and mitigate the economic impact of Russia’s military invasion.
The global lender said Ukrainian authorities had cancelled an existing standby lending arrangement with the IMF but they would work together to design an appropriate economic programme focused on rehabilitation and growth when conditions permitted.
“The Russian military invasion of Ukraine has been responsible for a massive humanitarian and economic crisis,” the IMF managing director, Kristalina Georgieva, said after the meeting, predicting a deep recession in Ukraine this year.
“Financing needs are large, urgent, and could rise significantly as the war continues,” she said. Once the war was over, Ukraine was likely to need additional “large support”.
Vladyslav Rashkovan, Ukraine’s alternate executive director at the IMF, gave an emotional and deeply personal speech at the board meeting about the devastation caused by the war and its impact on its people, a source familiar with the meeting said.
His remarks were met with spontaneous applause, a rare event at such meetings. In its statement on the new funding, the Russian executive director, Aleksei Mozhin, who is the board’s most senior member and serves as its honorary dean, spoke only briefly, telling members: “I pray for peace,” the source said.
The IMF said the war had resulted in very serious consequences, citing the departure of more than 2 million people from the country in 13 days and destruction of key infrastructure. Russia calls the assault a “special military operation”.
The disbursement under the IMF’s rapid financing instrument (RFI), equivalent to 50% of Ukraine’s quota in the IMF, would help fund urgent spending needs in the short term, while helping to catalyse financing from other partners, the IMF said.
The RFI provides rapid funding to IMF member countries without the need for a fully fledged programme. Members can tap the RFI repeatedly within any three-year period if the balance of payments need is caused by an exogenous shock, according to the IMF website.
It comes on top of $700m disbursed to Ukraine by the IMF in December, and $2.7bn in IMF special drawing rights, or emergency reserves, that Ukraine received as part of an IMF allocation in August.
The World Bank’s executive board on Monday approved a $723m package of loans and grants for Ukraine.