The International Monetary Fund (IMF) has granted staff approval for a loan of $15.6 billion to Ukraine, marking the first time the IMF has provided financial assistance to a country at war in its 77-year history. According to an official statement from the IMF, a comprehensive loan program over four years has been agreed upon between the institution and the government of Kyiv. The program is expected to receive final approval from the IMF board in the coming weeks. According to the recently approved staff-level agreement between Ukraine and the International Monetary Fund (IMF), the $15.6 billion loan program will be implemented over four years, divided into two phases.
The first phase, lasting 12-18 months, will focus on strengthening fiscal, external, price, and financial stability, with measures including the elimination of monetary financing. The second phase will prioritize more comprehensive reforms to support the nation’s recovery and reconstruction, as well as bolster macroeconomic stability. During this period, Ukraine will be expected to return to pre-war policy frameworks, such as a flexible exchange rate and inflation-targeting regime, and work towards its goal of joining the European Union.
The International Monetary Fund’s staff has forecasted a range of economic growth rates for Ukraine this year, from a 3% contraction to a 1% expansion, following a drastic slump of 30% in 2022. Gavin Gray, who led the IMF’s mission, stated, “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.”