IMF uses loophole to grant Ukraine $1.3 bln alongside other funds
This helps Kiev avoid an IMF rule that requires borrowers to prove debt sustainability - an evaluation that would otherwise be doubtful given the war's uncertainty and Ukraine's government's long history of corruption.
-
The International Monetary Fund logo is seen during the IMF/World Bank July 2022 meetings in the US (Reuters)
The International Monetary Fund's executive board accepted Ukraine's request for $1.3 billion in additional emergency money on Friday to help the country's economy.
The funds will flow from a new emergency lending program authorized by the IMF board last month to tackle food shortages. Ukraine also sought program monitoring with board participation to deepen policy commitment and stimulate donor support, according to the IMF.
Kristalina Georgieva, the IMF Managing Director, welcomed the decision on Twitter where she tweeted that "This is vital to help catalyze urgently needed donor support and help pave the way for a full-fledged fund program."
Good news. Today our Executive Board approved $1.3 billion in emergency financing to Ukraine under our new Food Shock Window.
— Kristalina Georgieva (@KGeorgieva) October 7, 2022
This is vital to help catalyze urgently needed donor support and help pave the way for a full-fledged Fund program. https://t.co/R3yLgjpTK6
Georgieva went on to say in a statement that the national governments who are currently financially aiding Ukraine have agreed to guarantee that the country can fulfill its existing debts to the Fund.
This helps Kiev avoid an IMF rule that requires borrowers to prove debt sustainability - an evaluation that would otherwise be doubtful given the war's uncertainty and Ukraine's government's long history of corruption.
"The balance of probabilities suggests that there are higher risks of debt being unsustainable," Georgieva said.
After a discussion that lasted more than an hour and a half, the board decided to approve funds, which are in addition to the $1.4 billion the IMF had already committed to Ukraine.
IMF officials are scheduled to meet with Ukrainian officials in Washington next week at the IMF and World Bank annual meetings.
According to numerous people familiar with the arrangements, IMF officials would then go to Vienna the following week for technical discussions with Ukrainian authorities concerning Ukraine's budget plans and monetary policies.
Read more: IMF: Massive downgrades in global growth, global output forecasts
