Frequently-Asked Questions on Russia-Ukraine War

March 15, 2022

Q1. What resources is the IMF making available to help Ukraine?

  • The IMF is doing everything it possibly can—as quickly as possible—to help Ukraine. On March 10, our Board approved emergency financing of $1.4 billion under the Rapid Financing Instrument (RFI), money that was disbursed immediately to help with urgent spending needs.
  • Before the war, the IMF already had in place a financial program with Ukraine, of which we, most recently, disbursed $700 million. We also made available $2.7 billion last August—Ukraine’s share in the IMF’s general SDR allocation of $650 billion to all member countries—funds that have proven very valuable in light of what has happened.

Q2. Why did Ukraine cancel its existing program?

  • Given the dire situation in Ukraine, speed is of essence. The authorities requested the cancellation of the existing Stand-By Arrangement to shift focus to emergency measures. Given the ongoing conflict, this is understandable. At the same time, the authorities expressed their intent to work with the IMF to design an appropriate economic program aimed at rehabilitation and growth, once conditions permit.

Q3. What else are you doing to support Ukraine?

  • The RFI provides immediate emergency funding to the authorities this is much needed. It will also help the country catalyze and mobilize additional funding including concessional financing.
  • We are also working with bilateral donors, who have asked the Fund to establish and administer an instrument through which they can channel their resources to support Ukraine. This ‘IMF administered account’ would provide a vehicle to pool loans and/or grants from interested donors in meeting the extraordinary balance of payments needs of Ukraine, while supporting macroeconomic stability.

Q4. How are you helping other countries affected by the crisis?

  • The IMF is working to help neighboring countries that are at risk of scarcity and supply disruptions – and are impacted by the increasing flow of refugees. For example, Moldova has requested additional financing under its existing IMF-supported program to help meet the costs of the current crisis, and IMF staff are actively discussing options with the authorities. We also stand ready to support countries farther afield that will be affected by rising food and energy prices and deteriorating financial conditions, e.g., in Africa.

Q5. What impact will the war in Ukraine and the sanctions imposed on Russia have on the global recovery?

  • We are deeply shocked and saddened by the devastating human suffering brought by the war in Ukraine. We need to urgently address the dramatic and fast growing humanitarian crisis. This, according to UNHCR, already includes millions of refugees—mostly women, children and elderly—fleeing the conflict to Ukraine’s neighboring countries.
  • Aside from the human toll, the conflict is resulting in dramatic and far reaching economic consequences, with spillovers to the region and the world. The situation today is terrible for Ukraine with massive suffering and destruction of the economy. We expect a bad recession in Russia. And we expect spillover impact on the neighbors and the rest of the world.
  • Impacts will flow through three channels. (1) Higher prices for commodities like food and energy will fuel inflation, in turn eroding the value of incomes and weighing on demand. (2) Neighboring economies, in particular, will grapple with disrupted trade, supply chains and remittances as well as a historic surge in refugee flows. (3) Reduced businesses confidence and higher investor uncertainty will weigh on asset prices, in turn tightening financial conditions and potentially spurring capital outflows from emerging markets.
  • The Fund will soon update its global outlook. Overall, we expect there will be a downgrade, though we still expect positive growth for most economies.

Q6. What are the chances of a default by Russia? What impact would that have on them and on the global economy?

  • The Russian default is no longer an improbable event. Regarding the global economy, direct financial exposures to Russian debt are, by and large, manageable, but ongoing events can only increase the probability of a risk-off episode that could pressure emerging markets.

Q7. What do you think will be the impact of the war in the U.S. and globally?

  • U.S. growth is solid, employment is rapidly returning to pre-pandemic levels. Like many other countries, the U.S. continues to see a high level of inflation and policymakers need to guard against that. But the U.S.’ economy’s direct linkages to Ukraine and Russia are much less than for many other countries, so the direct economic impact of the war will likely be less.
  • For the global economy more broadly, we expect a significant hit—the conflict is a significant setback to the global recovery from the pandemic and will likely exacerbate inflation. We are still assessing the full impact on global inflation and growth and will offer a fuller picture in our April World Economic Outlook report.
  • Clearly, we are witnessing perhaps the most complex economic policy environment of our lifetimes: e.g., balancing the trade-off between raising interest rates to deal with inflation while ensuring the post-pandemic recovery continues. And above all, working to help people—especially the most vulnerable—to deal with yet another shock to their lives and livelihoods.

Q8. Do you continue to engage with Russia, and do they have access to IMF support?

  • Russia does not have an IMF-supported program—nor has there been any request from Russia for financial support. In fact, we haven’t lent to Russia for decades. Moreover, we haven’t been approached for economic advice since the beginning of the war.

Q9. Can the IMF restrict Russia from using its SDRs?

  • The way SDRs typically work is that for a country to use them, it requires a voluntary exchange with other member countries to convert the SDRs into currencies. As a practical matter, given the sanctions that have been announced, that is likely to complicate Russia’s ability to use SDRs.

Q10. Is the IMF office in Moscow still operating?

  • The Moscow office is not actively operating.