It helps Kyiv avoid an IMF rule that requires borrowers to prove debt sustainability — an assessment that would otherwise be dubious given the uncertainty of the war and the Ukrainian government’s long history of corruption.
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The International Monetary Fund logo is seen during the July 2022 IMF/World Bank meetings in the United States (Reuters)
The board of the International Monetary Fund on Friday accepted Ukraine’s request for $1.3 billion in additional emergency funds to help the country’s economy.
The funds will come from a new emergency lending program authorized by the IMF board last month to tackle food shortages. Ukraine has also requested follow-up to the program with board involvement to deepen political engagement and boost donor support, according to the IMF.
Kristalina Georgieva, the IMF’s managing director, welcomed the decision on Twitter, where she tweeted that “it’s vital to help catalyze urgent donor support and help pave the way for a full-fledged fund program.” .
Good news. Today, our Board of Directors approved $1.3 billion in emergency funding for Ukraine under our new food shock window.
This is essential to help catalyze urgent donor support and help pave the way for a fully-fledged Fund programme. https://t.co/R3yLgjpTK6
— Kristalina Georgieva (@KGeorgieva) October 7, 2022
Georgieva went on to say in a statement that national governments currently assisting Ukraine financially have agreed to guarantee that the country can honor its existing debts to the Fund.
It helps Kyiv avoid an IMF rule that requires borrowers to prove debt sustainability — an assessment that would otherwise be dubious given the uncertainty of the war and the Ukrainian government’s long history of corruption.
“The balance of probabilities suggests there are higher risks that the debt is unsustainable,” Georgieva said.
After a discussion that lasted more than an hour and a half, the board of directors decided to approve funds, which are added to the 1.4 billion dollars that the IMF had already committed for Ukraine.
IMF officials are due to meet with Ukrainian officials in Washington next week during the IMF and World Bank’s annual meetings.
According to many people familiar with the arrangements, IMF officials would then travel to Vienna the following week for technical discussions with Ukrainian authorities regarding Ukraine’s fiscal plans and monetary policies.
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