IMF board approves $15.6bln funding for Ukraine as 'loan package'

By Al Mayadeen English
Source: Agencies
31 Mar 2023 22:40

Ukraine is the first country in the IMF's history to be granted a loan while engaging in a large-scale war.

The International Monetary Fund logo is seen during the IMF/World Bank July 2022 meetings in the US. (Reuters)

The International Monetary Fund (IMF) approved on Friday a new loan to Ukraine of $15.6 billion as part of a US$115 billion total support package for the Eastern European country.

“The Executive Board of the International Monetary Fund (IMF) approved today a 48‑month extended arrangement under the Extended Fund Facility (EFF) with an amount of SDR 11.6 billion (577 percent of quota or about US$15.6 billion),” the Fund added.

Ukraine's EFF "aims to anchor policies that sustain fiscal, external, price and financial stability and support economic recovery, while enhancing governance and strengthening institutions to promote long-term growth in the context of post-war reconstruction and Ukraine’s path to EU accession," it continued.

The board's decision allows the immediate disbursement of $2.7 billion, according to the statement.

The EEF is the first large-scale loan package that the Fund approves for a country that is engaging in a broad war. Last year, Ukraine's previous IMF loan of $5 billion expired.

The Fund expects "concessional financing from Ukraine’s international donors and partners" to establish credit assurances on the debt relief program that even extends until after the war, as the risk of the financing is significantly high.

IMF First Deputy Managing Director Gita Gopinath stressed that the "risks to the EFF arrangement are exceptionally high" and that the "success of the program depends on the size, composition, and timing of external financing on concessional terms to help close fiscal and external financing gaps and restore debt sustainability on a forward-looking basis."

The overall $115 billion package consists of the IMF loan, $80 billion in pledges for grants and loans from other countries, and $20 billion worth of debt relief commitments from private companies and donors, an IMF official said.

“A significant group of Fund shareholders reaffirms their recognition of the Fund's preferred creditor status in respect of the amounts currently outstanding to the Fund by Ukraine, plus any purchases under the extended arrangement."

Ukrainian President Volodymyr Zelenksy thanked the Fund's decision and considered it "an important help in our fight" against Russia.

I'm thankful to the IMF and @KGeorgieva for approving a new four-year support program for Ukraine for the total of $15.6 billion. It is an important help in our fight against Russian aggression. Together we support the 🇺🇦 economy. And we are moving forward to victory!
— Володимир Зеленський (@ZelenskyyUa) March 31, 2023