IMF staff reaches agreement with Ukraine

The International Monetary Fund said 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% to +1%, 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.