IMF staff reaches agreement with Ukraine for $15.6-B program

WASHINGTON  -The International Monetary Fund said on Tuesday it has reached a staff-level agreement with Ukraine for a four-year financing package worth about $15.6 billion, offering the country needed funds as it continues its battle against Russia’s invasion.

The agreement, which must still be ratified by the IMF’s board, follows months of negotiations between IMF staff and Ukrainian authorities. The IMF said its executive board is expected to discuss approval in the coming weeks.

IMF staff briefed board members on the agreement – which would be Ukraine’s biggest loan package since Russia’s full-scale invasion on Feb. 24, 2022 – on Tuesday, and the board was supportive, a source familiar with the matter said.

The global lender said the agreement is expected to help unleash large-scale financing for Ukraine from international donors and partners, but gave no details. Typically IMF loans unlock support from the World Bank and other lenders.

“A gradual economic recovery is expected over the coming quarters, as activity recovers from the severe damage to critical infrastructure, although headwinds persist, including the risk of further escalation in the conflict,” IMF official Gavin Gray said in a statement announcing the agreement.

IMF staff currently expect the change in Ukraine’s real gross domestic for 2023 to range from -3 percent to +1 percent, Gray added.

Ukrainian Prime Minister Denys Shmyhal hailed the agreement and thanked the IMF for its support.

“In conditions of a record budget deficit, this program will help us finance all critical expenditure and ensure macroeconomic stability and strengthen our interaction with other international partners,” he said in a message on Telegram.

U.S. Treasury Secretary Janet Yellen, who paid a surprise visit to Ukraine last month, welcomed the deal after months of pushing for the IMF to move forward with a new financing package for Ukraine.

“An ambitious and appropriately conditioned IMF program is critical to underpin Ukraine’s reform efforts, including to strengthen good governance and address risks of corruption, and provide much needed financial support,” she said in a statement.

The fund had last week changed a rule to allow new loan programs for countries facing “exceptionally high uncertainty” without naming Ukraine.

If approved, as expected, the loan would be the IMF’s biggest loan to a country involved in an active conflict.

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