The International Monetary Fund (IMF) executive board on Wednesday approved an additional $1.4 billion emergency financing for Ukraine to help supplement urgent financing needs and mitigate the economic impact amid the ongoing war with Russia. The said fund will be disbursed under the Rapid Financing Instrument (RFI) to bolster Ukraine’s economy amid severe human sufferings and a potentially deep recession predicted for later this year, IMF said in a statement. The monetary fund also informed that the Ukrainian authorities had cancelled an existing stand-by lending arrangement with the global lender but promised to work with the additional funds to design economic reforms focused on growth when conditions permit.
“The Russian military invasion of Ukraine has been responsible for a massive humanitarian and economic crisis. Financing needs are large, urgent, and could rise significantly as the war continues,” Kristalina Georgieva, IMF Managing Director, said in a statement, adding that once the war is over war-torn Ukraine was likely to need “large support.”
“The tragic loss of life, huge refugee flows, and immense destruction of infrastructure and productive capacity is causing severe human suffering and will lead to a deep recession this year,” she further noted.
As per the IMF, the disbursement under RFI is equivalent to 50% of Ukraine’s quota in the financial institution and it will help Ukraine meet the urgent spending needs while catalysing and securing finance from other partners. The funding comes atop $700 million disbursed to Ukraine by IMF in December 2021 and $2.7 billion in IMF’s Special Drawing Rights or emergency reserves which Kyiv received as part of an IMF allotment last year in August.
Today the International Monetary Fund’s Executive Board approved $1.4 billion in emergency funding for Ukraine. These funds are for Ukraine to help meet urgent financing needs and mitigate the economic impact of the war. Read more here: https://t.co/r0sG8wh8C3
— IMF (@IMFNews) March 9, 2022
World Bank approves $732mn package of loans for Ukraine
The IMF fundings come after World Bank last Monday approved a $723 million package of loans and grants for Ukraine, providing government support amid the full-blown conflict. The package also includes supplemental budget support for Ukraine under Financing of Recovery from Economic Emergency in Ukraine or FREE Ukraine for $489 million, the bank said in a statement.
“The package approved by the Board consists of a supplemental loan for USD 350 million and guarantees in the amount of USD 139 million and is also mobilizing grant financing of USD 134 million and parallel financing of USD 100 million, resulting in total mobilized support of USD 723 million,” it added.
Russia-Ukraine war
To note, the additional economic support to Ukraine come as Russian President Vladimir Putin on February 24 attacked Ukraine’s sovereignty and territorial integrity. However, Putin has over time defended his decision, saying that he intends to “demilitarise and denazify” Ukraine and stop “genocide” in Donbass. The war resulted in violations of the Minsk Accord by Moscow after it unilaterally identified two of Ukraine’s breakaway rebel-held regions. Ever since, arbitrary bombings by Russian armed forces have inflicted heavy damage on Ukrainian life and property, killing thousands and damaging civil and commercial infrastructure.