Ukraine could secure “sizeable support” from the International Monetary Fund under a new, longer-term program, and its economy should see a gradual recovery over the course of this year, IMF Managing Director Kristalina Georgieva said on Tuesday, February 21.
Prime Minister Denys Shmyhal said this week Ukraine hopes to agree a $15-billion multi-year program with the Fund in what could be the largest loan package for the country since Russia’s full-scale invasion a year ago.
“Based on the performance of the Ukrainian authorities, we are confident that it could be a sizeable support from us,” Georgieva said during a call with media a day after a one-day visit to Kyiv.
“We are in the process of discussing with Ukrainian authorities what will be the components of the program, the duration of the program. We are certainly talking about the longer duration, because clearly Ukrainian policy challenges are not going to evaporate any time soon.”
Deputy US Treasury Secretary Wally Adeyemo, speaking in Washington, welcomed IMF support for Ukraine, saying it demonstrated the international community’s long-term commitment.
Separately, the World Bank’s vice president for Europe and Central Asia said the bank now estimated that Russian attacks had resulted in five times the damage to Ukraine’s energy infrastructure since the last estimate in June 2022.
During her visit, Georgieva met Shmyhal, President Volodymyr Zelenskiy, Finance Minister Serhiy Marchenko, and central bank Governor Andriy Pyshnyi, and said she was heartbroken to see the widespread destruction and suffering caused by Russia’s invasion.
“Yet, as I stood in front of destroyed buildings in Kyiv and Irpin yesterday, I was also able to experience firsthand the resilience of the people of Ukraine,” she said. “I was truly inspired by their determination to persevere under these extremely difficult conditions.”
Praise for Ukraine
In a statement issued in Warsaw, Poland, after her visit to Ukraine, Georgieva lauded the Ukrainian authorities for their “impressive economic management” and their vision to move to transformational recovery and EU accession.
The IMF has provided Ukraine with $2.7 billion in two emergency loans since February 24, 2022, finance ministry data showed. For the past four months, Ukraine has worked with the IMF under an economic policy monitoring program which was a prerequisite to establishing the full-fledged lending program.
Ukraine depends heavily on foreign financial aid and the IMF’s involvement is crucial to catalyze support from other foreign backers and reassure investors that the country’s economic policies are sound.
Georgieva said she was particularly impressed with the level of tax collection and efforts to keep inflation at bay.
The finance ministry said it had collected about 919.3 billion hryvnias ($25 billion) in various taxes and duties in 2022. Overall budget revenues totaled 1.491 trillion hryvnias, including about $32 billion in foreign aid. Consumer price inflation reached 26.7% in 2022, lower than initially forecast.
Georgieva said the IMF expected to see gradual recovery by Ukraine’s economy throughout 2023. Ukraine lost about one-third of its gross domestic product last year.
“Ukraine is strong because its government and its people are strong and it is strong because the financial support for Ukraine is predictable and delivered in a timely manner,” she said. “We have to keep going the same way in 2023 as we have done in 2022.” – Rappler.com
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