May 18. 2024. 4:08

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IMF staff reaches agreement with Ukraine for $15.6bn programme


The International Monetary Fund announced on Tuesday (21 March) that it had reached a staff level agreement with Ukraine to fund a four year financing package of approximately $15.6 billion. This will provide funds for Ukraine as it defends against Russian invasion.

The IMF’s board must still ratify the agreement. It takes into account Ukraine’s path to joining the European Union following the war. According to the fund, its executive board would discuss approval within the next few weeks.

Gavin Gray, an official at the IMF, stated that the programme’s overarching goals were to maintain economic and financial stability under conditions of extraordinarily high uncertainty, restore debt sustainability and support Ukraine’s recovery along the path towards EU accession in post-war periods.

The IMF staff briefed the board members Tuesday about the agreement, which would be Ukraine’s largest loan package since Russia invaded Ukraine on February 24, 2022. A source familiar with the matter stated that the board was supportive.

According to the global lender, the agreement is expected to facilitate large-scale financing for Ukraine by international donors and partners. However, it did not provide any details. IMF loans typically unlock support from the World Bank or other lenders.

Calculations have in the past calculated the cost of reconstruction in hundreds of billions of US dollars.

Gray stated that a gradual economic recovery can be expected in the next quarters as activity recovers form the severe damage to critical infrastructure. However, headwinds remain, including the possibility of further conflict escalation.

Gray said that the IMF staff expects that Ukraine’s real gross national product will change between -3% and +1% in 2023.

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Denys Shmyhal, the Ukrainian Prime Minister, praised the agreement and thanked IMF for its support.

Janet Yellen (US Treasury Secretary) visited Ukraine last month and welcomed the agreement after months of lobbying for an IMF new financing package for Ukraine.

She stated that an ambitious and well-conditioned IMF program was crucial to support Ukraine’s reform efforts. This includes strengthening good governance and addressing corruption risks. It also provides financial support.

The largest shareholder of the IMF is the United States.

If approved as expected, the Ukraine loan would be the largest IMF loan to a country in active conflict.

Last week, the fund amended a rule to allow loan programs for countries with "exceptionally high uncertainty", but did not name Ukraine.

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