Ukraine to clinch first IMF loan to nation at war

The International Monetary Fund (IMF) says it has reached a financing deal with Ukraine worth $15.6 billion (£12.8 billion).

The organization’s first loan to a country at war is expected to be approved in the coming weeks.

It will also be one of the largest funding packages Ukraine has received since the Russian invasion.

The IMF recently changed its rules allowing lending to countries facing “very high uncertainty”.

“Russia’s invasion of Ukraine continues to have a devastating effect on the economy, with a 30% contraction in activity in 2022, the destruction of much of the capital stock and rising poverty levels,” said Gavin Gray of the IMF. said in a statement.

“The program is designed in line with the New Fund’s policy on lending under very high uncertainty and expects strong funding guarantees from donors, including the G7 and the EU.”

Gray also said the deal would be a “massive mobilization of concessional funds” to Ukraine from international donors and partners, but gave no further details. This funding is subject to approval by the IMF Executive Board.

The IMF expects the Ukrainian economy to contract slightly or grow this year.

Ukrainian Prime Minister Denis Shmykhal said the funding would help the country “finance all important expenditures, ensure macroeconomic stability and strengthen interaction with other international partners.” rice field.

“An ambitious and well-coordinated IMF program is essential to underpinning Ukraine’s reform efforts,” said US Treasury Secretary Janet Yellen during a surprise visit to Ukraine last month.

The United States is the largest shareholder of the IMF and the largest contributor to Ukraine in terms of spending.

Military aid, which accounts for more than half of U.S. spending in Ukraine, goes to support drones, tanks, missiles and other military systems, as well as training, logistics and intelligence operations.

Since Russia invaded Ukraine last February, funds have been pouring into the conflict from all over the world.

Last week, the IMF said its executive board had approved rule changes that would allow funding to countries facing “extremely high uncertainty.”

Without mentioning Ukraine, he said the measures apply to countries experiencing “extrinsic shocks beyond the reach of national authorities and economic policies.”