IMF board approves $900 million for Ukraine as Zelenskyy visits

The International Monetary Fund’s executive board (IMF) on Monday (11 December) approved a $900 million disbursement for Ukraine from its $15.6 billion loan program, hours before IMF chief Kristalina Georgieva met with Ukrainian President Volodymyr Zelenskyy.

Georgieva met with Zelenskyy for nearly an hour at IMF headquarters in Washington and told him the IMF’s executive board was unanimous in its support for Ukraine, apart from one country, IMF officials said, in a clear reference to Russia.

The board approved a staff agreement reached last month with Ukrainian authorities after the second review of Kyiv’s progress on a four-year Extended Fund Facility loan approved earlier this year. That paves the way for $900 million disbursement, bringing total IMF funding for Ukraine this year to $4.5 billion.

“The EFF continues to provide a strong anchor for the authorities’ economic program, and its implementation has been broadly on track despite the extremely challenging backdrop,” the IMF said in a statement.

Georgieva said Ukraine’s economy had proven resilient despite Russia’s invasion in February 2022 and the “enormous social and economic costs” it posed.

“Looking ahead, whereas the recovery is expected to continue, the outlook has significant risks stemming mainly from the exceptionally high war-related uncertainty,” Georgieva said in a statement. “It is also critical that external financing on concessional terms continue on a timely and predictable basis.”

Zelenskyy is in Washington to meet with US President Joe Biden and top congressional officials as he seeks to shore up support for continued US security assistance to help Kyiv continue its fight against Russia’s invasion.

Ukraine has received more than $68.5 billion in budgetary support since the war started, finance ministry data shows.

Its government expects a budget deficit of about $43 billion in 2024 and plans to cover it with domestic borrowing and financial aid from its Western partners. But Ukrainian officials are growing worried about the certainty of financing, and some analysts predict Western aid could start diminishing next year.

Gavin Gray, the IMF’s mission chief for Ukraine, called on Ukraine to conduct an “ambitious” external commercial debt restructuring in the first half of 2024 to help restore debt sustainability.

Gray told reporters the IMF had upgraded Ukraine’s growth forecast for 2023 to 4.5% from an earlier range of 1% to 3%, and expected growth of 3% to 4% in 2024, citing what he called the “remarkable resilience” of the economy. A second official said 2023 growth could potentially exceed 4.5%.

Asked about possible international donor fatigue, Gray said Ukraine continued to face risks on securing external financing, but they were not necessarily higher than during first review of Ukraine’s $15.6 billion loan program.

He said the IMF would conduct a third review under the EFF loan in the spring, and would be looking for moves by Ukraine to bolster its tax revenues.

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