IMF approves $880b loan payment for Ukraine

The International Monetary Fund’s executive board on Thursday approved a third review of Ukraine’s $15.6 billion loan program, allowing the release of $880 million for budget support and bringing total disbursements to $5.4 billion, the IMF said.

The global lender said the risks facing Ukraine remained exceptionally high, particularly the uncertainties surrounding the war with Russia and prospects for external financing, although Ukraine mission chief Gavin Gray told reporters the fund still expected the war in Ukraine to wind down by the end of 2024.

Gray said Ukraine’s overall performance on the IMF program had remained strong over its first year, and it had met all but one of the quantitative performance criteria. The miss involved tax revenues, but involved a very minor amount.

Ukraine should receive the funds in coming days, Gray said. That should be welcome news as the US Congress continues to debate approval for a $61 billion supplemental aid package for Ukraine. Gray said the IMF would have to study the impact on Ukraine’s debt levels if US lawmakers decided to convert some of that funding to a loan instead of a grant.

Sanaa Nadeem, the IMF’s deputy mission chief for Ukraine, said the IMF had approved a new debt sustainability analysis for Ukraine that had not materially changed the macroeconomic analysis, but did exclude some $3 billion in debt for Russian Eurobonds that had been contested by the Ukrainian authorities.

She told reporters that credible progress was being made on restructuring Ukraine’s commercial debt and the IMF expected ongoing technical discussions on that issue to pick up in coming weeks.

Meanwhile, Ukraine could dismantle within days its “sponsors of war” blacklist, central to Kyiv’s campaign to expose companies doing business with Russia, after a backlash from countries including China and France, two people familiar with the matter said.

The blacklist has no legal standing, but has been an embarrassment for around 50 major companies singled out for operating in Russia and helping the Kremlin’s war in Ukraine by, for instance, paying taxes.