- By Annabelle Liang
- business reporter
2 hours ago
Image source, Getty Images
The International Monetary Fund (IMF) says it has reached a staff-level agreement with Ukraine for $15.6 billion (£12.8 billion) in funding.
The organization’s first loan to a country at war is expected to be approved in the coming weeks.
It would also be one of the largest funding packages Ukraine has received since the Russian invasion.
The IMF recently changed a rule to allow lending to countries facing “exceptionally high levels of uncertainty”.
“Russia’s invasion of Ukraine continues to have a devastating impact on the economy: activity fell by 30 percent in 2022, much of the capital stock was destroyed and poverty rates rose,” IMF official Gavin Gray said in a statement.
“The program has been designed in line with the new fund’s lending policy under exceptionally high levels of uncertainty and strong funding commitments are expected from donors, including the G7 and the EU.”
Mr Gray also said the deal would mobilize “large-scale concessional financing” for Ukraine from international donors and partners, without giving further details.
The IMF expects the Ukrainian economy to shrink or grow slightly this year.
Ukrainian Prime Minister Denys Shmyhal said the funding would help the country “finance all critical spending, ensure macroeconomic stability and strengthen our interaction with other international partners”.
US Treasury Secretary Janet Yellen, who paid a surprise visit to Ukraine last month, said: “An ambitious and properly conditioned IMF program is crucial to underpin Ukraine’s reform efforts.”
The US is the largest shareholder of the IMF and the largest contributor to Ukraine in terms of funds spent.
Military aid, which accounts for more than half of US spending on Ukraine, funds drones, tanks, missiles and other munitions systems, as well as training, logistics and intelligence support.
Funds from around the world have continued to flow into the conflict since Russia invaded Ukraine last February.
Last week, the IMF said its Executive Board approved a rule change to allow funding for countries facing “extraordinarily high levels of uncertainty.”
Without mentioning Ukraine, it said the measure applies to countries “experiencing exogenous shocks that are beyond the control of country authorities and the reach of their economic policies.”