IMF Executive Board Approves US$ 1.3 Billion in Emergency Financing Support to Ukraine

IMF News, October 7, 2022

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The Executive Board approved a disbursement of US$1.3 billion (SDR 1,005.9 million) to Ukraine.
The disbursement is under the food shock window of the Rapid Financing Instrument (RFI).
The disbursement is equivalent to 50 percent of Ukraine’s quota in the IMF.

To help meet Ukraine’s urgent balance of payments needs, including due to a large cereal export shortfall.
To play a catalytic role for further financial support from Ukraine’s creditors and donors.

Russia’s war against Ukraine has caused “tremendous human suffering and economic pain.”
Amid massive population displacement and destruction of housing and key infrastructure, real GDP is projected to contract by 35 percent in 2022 relative to 2021.
Financing needs remain very large; the fiscal deficit has increased to unprecedented levels.
Key macroeconomic policies have been geared toward:
- safeguarding priority expenditures,
- easing pressure on the hryvnia and international reserves,
- preserving financial stability.

“The Ukrainian authorities deserve considerable credit for having maintained an important degree of macro-financial stability in these extremely challenging circumstances.”
Ukraine has requested program monitoring with board involvement (PMB) to strengthen policy commitment and further catalyze donor support.
The Fund will start staff discussions soon on Program Monitoring with Board involvement (PMB), which “will aim to provide a strong anchor for macroeconomic policies, further catalyze donor support, and help to pave the way towards the upper credit tranche arrangement.”

Ukraine faces risks and uncertainties related to the hazardous security situation, policy implementation capacity, and external developments.
“Very high uncertainty makes it difficult, at present, to assess with sufficient precision what would be required to ensure sustainability of Ukraine’s debt, but the balance of probabilities suggests that there are higher risks of debt being unsustainable.”
Bilateral creditors and donors have signaled they intend to continue financially supporting Ukraine to help achieve a balanced growth path and medium-term external viability.
To allay risks to the Fund from lending under these circumstances, bilateral creditors and donors have:
- reaffirmed recognition of the Fund's preferred creditor status in respect of the amounts outstanding to Ukraine, including the requested drawing under the new RFI Food Shock Window;
- undertaken—given Ukraine's continuing cooperation with the Fund—to provide financial support on appropriate terms to secure Ukraine’s ability to service to the Fund its existing obligations that have already been approved by the Executive Board and the amounts provided under the new Food Shock Window;
- confirmed that during this initial period of support by the Fund a deferral by the Group of Creditors of Ukraine will be in place as announced on July 20, 2022, with respect to those obligations of Ukraine that are falling due to them.

Source: Press Release No. 22/343, October 7, 2022, IMF.