WASHINGTON (AFP) – The International Monetary Fund (IMF) said on Monday it had approved an economic monitoring programme for Ukraine which could help Kyiv secure funding from donors, with the war-torn country needing more than USD40 billion this year.
The monitoring programme “is designed to help Ukraine maintain stability and catalyse donor financing amid very large balance of payment needs and exceptionally high risks”, following the invasion, the IMF said in a statement.
Ukrainian authorities are committed to economic and financial reforms, concerning in particular tax collection, the domestic debt market, transparency and the independence of the central bank, the IMF said. They have four months to prove their progress as per the Programme Monitoring with Board involvement (PMB) scheme, the statement said.
The framework of measures monitored by the IMF aims to pave the way for financing, which can “come from many sources”, said IMF’s head of mission for Ukraine Gavin Gray.
Ukraine needed between USD40 billion and USD57 billion to cover its budgetary and operating needs for 2023, Gray said.
Following the IMF’s recommendations would “give the donors the confidence to provide resources”, he said. Russia’s invasion “continues to have a devastating social and economic impact on Ukraine”, with mounting civilian casualties and a third of the population displaced, IMF First Deputy Managing Director Gita Gopinath said in a statement.
“Notwithstanding all these strains, the authorities have largely managed to maintain macroeconomic and financial stability, and they are committed to continue adapting policies to fast-changing circumstances, including in the case of a severe downside scenario,” Gopinath said.
“Large and predictable external financial support will be critical for the success of the authorities’ strategy, and front-loaded disbursements would help address strains in early 2023,” she said.
If Ukraine successfully follows the monitoring programme, it “should help pave the way toward a possible full-fledged IMF-supported programme”, she said. Gray stressed it was “too premature” to say how big the IMF programme could be.
The IMF has provided USD2.7 billion in emergency aid to Kyiv since the start of the Ukraine invasion in February. The European Commission has just proposed aid of EUR18 billion (USD19 billion) in 2023 in the form of loans.