IMF Executive Board Approves $1.3 Billion in Emergency Financial Support for Ukraine
October 7, 2022
- The IMF Executive Board has approved the disbursement of $1.3 billion to Ukraine under the new food shock window of the Rapid Financing Instrument.
- More than seven months into Russia’s invasion of Ukraine, the humanitarian and economic toll remains enormous, resulting in large and urgent fiscal and external financing needs.
- The Ukrainian authorities have the merit of having maintained a significant degree of macro-financial stability in these extremely difficult circumstances.
The Executive Board of the International Monetary Fund (IMF) today approved a disbursement of $1.3 billion (SDR 1,005.9 million) under the food shock component of the Rapid Financing Instrument (RFI). ) to help meet Ukraine’s urgent balance of payments needs.
The scale and intensity of Russia’s war against Ukraine, which began more than seven months ago, has caused enormous human and economic suffering. In a context of massive population displacements and destruction of housing and key infrastructure, real GDP is expected to contract by 35% in 2022 compared to 2021 and financing needs remain very high. This disbursement under the RFI (equivalent to 50% of Ukraine’s quota in the IMF) will help to meet urgent balance of payments needs, in particular due to a large cereal export deficit, while acting as a catalyst for additional financial support from Ukraine’s creditors and donors.
The authorities deserve considerable credit for maintaining a significant degree of macro-financial stability under these extremely difficult circumstances and have requested program monitoring with Board involvement to strengthen their political commitment and further catalyze donor support.
The Board of Directors reiterated its strong support for the Ukrainian people.
Following the Board discussion, Ms. Kristalina Georgieva, Chief Executive Officer and President, made the following statement:
“Russia’s invasion of Ukraine, which began more than seven months ago, has caused widespread loss of life, massive displacement of people and significant destruction of infrastructure and housing. he impact on economic activity has been enormous: real GDP has contracted sharply, inflation has risen sharply, trade has been significantly disrupted and the budget deficit has reached unprecedented levels.
“The Ukrainian authorities deserve considerable credit for maintaining a significant degree of macro-financial stability under these extremely difficult circumstances. As the economy adjusts to the now protracted war, major macroeconomic policies have focused on safeguarding the priority spending, easing pressure on the hryvnia and international reserves, and preserving financial stability.
“In this context, and in light of the urgent and persistent balance of payments needs, notably due to a large cereal export deficit, the IMF has approved new emergency financing for Ukraine of a total amount of SDR 1,005.9 billion (approximately US$1.3 billion) under the new Shock Window food program.
“Ukraine faces risks and uncertainties related to the dangerous security situation, the ability to implement policies and external developments. Unique to the extreme circumstances currently prevailing in Ukraine, very high uncertainty makes it difficult , at this time, to assess with sufficient precision what would be required to ensure Ukraine’s debt sustainability, but the balance of probabilities suggests that there are higher risks that the debt will be unsustainable.
“Alongside Ukraine’s continued commitment to economic, fiscal and governance reforms and the strong engagement of all other stakeholders, including international financial institutions and the private sector, most Ukraine’s official bilateral creditors and donors, through the relevant Executive Directors at the Fund — have signaled their intention to continue financially supporting Ukraine to help it achieve a balanced growth trajectory and external sustainability middle term.
“In order to mitigate the risks to the Fund from lending to Ukraine in these circumstances, these bilateral creditors and donors have reaffirmed their recognition of the Fund’s preferred creditor status with respect to amounts owed to Ukraine, including the drawdown requested by Ukraine under the They undertake, taking into account Ukraine’s continued cooperation with the Fund, to provide financial support on appropriate terms to ensure Ukraine’s ability to to settle with the Fund its existing obligations which have already been approved by the Board of Directors and the amounts provided under the new food shock window, in accordance with the Fund’s preferred creditor status. They also confirmed that during this period initial support by the Fund, a deferral by Ukraine’s Group of Creditors will be in place as announced on July 20, 2022, with respect to Ukraine’s obligations under it. t.
The Fund will remain closely engaged with the Ukrainian authorities, with whom discussions with staff will soon begin on the follow-up to the program with the participation of the Board of Directors (PMB). The PMB will aim to provide a strong anchor for macroeconomic policies, further catalyze donor support and pave the way for the upper credit tranche arrangement. »
IMF Communications Department
PRESS OFFICER: Meera Louis
Call: +1 202 623-7100E-mail: [email protected]