In the upcoming weeks, it is anticipated that the organization would authorize its first loan to a war-torn nation.
Also, it would be one of the biggest financial aid packages Ukraine has gotten since Russian invasion.
A regulation governing loans to nations with “exceptionally high uncertainty” was recently amended by the IMF.
“Russia’s invasion of Ukraine continues to have a devastating impact on the economy: activity contracted by 30 percent in 2022, a large share of the capital stock has been destroyed, and poverty levels have climbed,” IMF official Gavin Gray stated in a statement.
“The programme has been designed in line with the new fund’s policy on lending under exceptionally high uncertainty, and strong financing assurances are expected from donors, including the G7 and EU.”
Without providing any additional information, Mr. Gray added that the accord will “mobilise large-scale concessional finance” for Ukraine from international partners and donors. The IMF executive board still needs to approve the funding.
This year, the IMF anticipates either a modest recession or growth in the economy of Ukraine.
The financing will enable Ukraine to “finance all critical expenditure, ensure macroeconomic stability, and strengthen our interaction with other international partners,” according to Prime Minister Denys Shmyhal.
In an unexpected trip to Ukraine this month, US Treasury Secretary Janet Yellen said: “An ambitious and appropriately conditioned IMF programme is critical to underpin Ukraine’s reform efforts.”
The US is Ukraine’s largest financial contributor and the IMF’s largest stakeholder.
President Joe Biden announced roughly $500 million more in military assistance from the US to Ukraine earlier this year. This was in addition to the $112 billion that Congress alone spent in 2022.
In addition to training, logistical, and intelligence support, military aid, which makes up more than half of US spending on Ukraine, covers the cost of drones, tanks, missiles, and other ordnance systems.
Since Russia’s invasion of Ukraine in February of last year, money has continued to flow into the conflict from all around the world.
The IMF announced last week that the adjustment to its rules allowing assistance for nations with “exceptionally high uncertainty” had been agreed by its executive board.
It stated that the measure was applicable to nations experiencing “exogenous shocks that are beyond the control of country authorities and the reach of their economic policies”.
