G-7 to extend crucial support for Ukraine’s IMF funding bid
Bloomberg News February 23, 2023
(Tribune New Service) — Group of Seven nations plan to offer key support for Ukraine’s effort to access International Monetary Fund financing by the end of March as IMF officials have begun talks with the U.S., people familiar with the matter said.
U.S. Treasury Secretary Janet Yellen has discussed a lending program with IMF Managing Director Kristalina Georgieva in recent days, with Treasury and IMF teams in daily contact, one of the people said. The Washington-based lender and Ukraine have been exploring a multi-year aid package worth as much as $16 billion to help cover the war-battered country’s needs and provide a catalyst for additional international funding.
G-7 governments — the U.S., U.K., Canada, Germany, France, Italy and Japan — are expected this week to formally task their officials with stepping up engagement with the IMF and Ukraine to deliver an ambitious program, the people said. The G7 endorsement is one of several IMF conditions for finalizing an agreement.
President Volodymyr Zelenskyy’s government seeks to clinch a fresh deal as soon as next month, with a goal of securing $5 billion during the first year, a person said earlier this week. The government wants to ensure financing of its needs with Russia’s war likely extending beyond 2023.
A year into the war, Ukraine is under urgent pressure to access funds after Russian forces destroyed swathes of the nation’s industrial base, grain exports and basic infrastructure. That’s triggered an economic contraction of some 30% last year and deprived the government of revenue to finance basic needs.
Georgieva, who visited Kyiv this week to meet with Ukrainian authorities, said the fund was prepared to provide significant economic support under a new full-fledged loan program.
Other conditions for the program are ensuring the sustainability of Ukraine’s debt by its main donors and creditors. The plan would also require lending-rules changes for the IMF, which doesn’t usually grant full-fledged loan programs for countries mired in military conflict.
“The international community will continue to have a vital role in supporting Ukraine, including to help address the large financing needs in 2023 and beyond,” Georgieva said Tuesday after visiting Kyiv. “The war in Ukraine has had far-reaching consequences for the local, regional, and global economy. Only if we work together as a global community will we be able to build a better future.”
Ukraine has so far tapped $2.7 billion in IMF aid under a rapid-financing instrument last year after Russia launched its invasion. To facilitate a full-fledged deal, Kyiv and the IMF are already cooperating in a non-cash monitoring agreement, which is seen as a precondition for a multi-billion loan program.
The IMF’s latest review confirmed Ukraine’s progress but didn’t provide any potential details of a new aid program. G-7 officials will be in India this week as part of a gathering of G-20 finance chiefs.
With assistance from Daryna Krasnolutska.
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