IMF board approves $15.6 billion loan for war-torn Ukraine

The executive board of the International Monetary Fund (IMF) on Friday (March 31) approved a four-year $15.6 billion loan for Ukraine to help the war-torn country meet urgent funding needs as it continues to defend against the Russian offensive. The loan is Ukraine's biggest since the beginning of the conflict in February last year and the first major package approved by the IMF to a country that is involved in an active conflict.

According to a statement, the IMF said the Extended Fund Facility, "aims to anchor policies that sustain fiscal, external, price and financial stability and support economic recovery, while enhancing governance and strengthening institutions to promote long-term growth in the context of post-war reconstruction and Ukraine’s path to EU accession."

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The decision formalises an IMF staff-level agreement reached with Ukraine on March 21. The agreement takes into consideration Ukraine's path to accession to the European Union after the war. It is expected to help unleash large-scale financing for the war-torn country from international donors and partners.

Announcing the agreement, IMF official Gavin Gray said in a statement, "The overarching goals of the authorities' programme are to sustain economic and financial stability in circumstances of exceptionally high uncertainty, restore debt sustainability, and support Ukraine's recovery on the path toward EU accession in the post-war period."

"A gradual economic recovery is expected over the coming quarters, as activity recovers from the severe damage to critical infrastructure, although headwinds persist, including the risk of further escalation in the conflict," Gray said. The IMF official added that the fund currently expected the change in Ukraine's real gross domestic product for 2023 to range from -3% to +1%.

Last week, Ukraine's Prime Minister Denys Shmyhal hailed the agreement and thanked the IMF for its support. Taking to Telegram, Prime Minister Shmyhal said the programme would help Ukraine finance all critical expenditures and ensure macroeconomic stability and strengthen its interaction with other international partners.

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