WASHINGTON (Reuters) – The International Monetary Fund said on Friday its executive board approved a $15.6 billion four-year loan program for Ukraine, part of a broader $115 billion international support package to help the country meet urgent financing needs as it struggles in it. The Russian invasion has been going on for 13 months.
The fund said in a statement that the decision paves the way for an immediate disbursement of about $2.7 billion to Kiev.
The Extended Financial Facility (EFF) is the first major financing program approved by the International Monetary Fund for a country embroiled in full-scale war. Last year Ukraine’s previous $5 billion International Monetary Fund program expired.
“The Russian invasion of Ukraine continues to have a devastating economic and social impact,” Gita Gopinath, First Deputy Managing Director of the International Monetary Fund, said in a statement.
Despite this, she added, the Ukrainian authorities “nevertheless managed to maintain overall macroeconomic and financial stability, thanks to skillful policy-making and significant external support.”
The decision formalizes an International Monetary Fund staff-level agreement reached with Ukraine on March 21, which takes into account Ukraine’s path to EU accession after the war.
Ukrainian President Volodymyr Zelensky welcomed the new funding.
“It is an important aid in our fight against Russian aggression,” he said on Twitter. “Together we support the Ukrainian economy. We are moving forward towards victory!”
The agreement is expected to help unlock large-scale financing for Ukraine from donors and international partners, including the World Bank and other lenders.
An IMF official said the $115 billion package includes the fund’s loan, $80 billion in pledges for grants and loans from other countries and $20 billion in debt relief commitments.
The IMF said many stakeholders, including international financial institutions, private sector companies and most of Ukraine’s official bilateral creditors and donors support a two-step debt remediation process for Ukraine that includes adequate financing guarantees on debt relief and concessional financing during and after the programme.
“The stakes for the EFF arrangement are exceptionally high,” said Gopinath. “The success of the program depends on the size, composition and timing of external concessional financing to help bridge fiscal and external financing gaps and restore debt sustainability on a forward-looking basis.”
(Reporting by Andrea Shalal and David Lauder). Editing by Ramy Ayoub, Chizu Nomiyama, and Thomas Janowski
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