The International Monetary Fund, the global lender of last resort, has agreed a package of support for Ukraine of $15.6bn (£12.8bn).
The loan, the first the Washington-based lender will make to a country at war, could represent one of the biggest tranches of financial support for Ukraine so far. It still needs to be signed off by the IMF’s executive board, a process that should conclude within weeks.
War had taken a “horrific humanitarian toll” on Ukraine, said Gavin Gray, the IMF’s mission chieffor the country, but it also “continues to have a devastating impact on the economy”.
Ukraine’s economic output – GDP – shrank by 30% last year and poverty levels have risen significantly. Pressure on public spending to support the economy and manage its war effort is considerable.
“The authorities have nevertheless managed to maintain macroeconomic and financial stability, thanks to substantial external support and skilful policymaking,” Gray said.
He held talks in Warsaw, Poland, with officials from the war-stricken country in mid-March. Gray was picked to head up the fund’s mission in Ukraine last year, in part due to his experience working for the fund on its activities in Iraq from 2018 to 2020.
“The overarching goals of the authorities’ programme are to sustain economic and financial stability in circumstances of exceptionally high uncertainty, restore debt sustainability and support Ukraine’s recovery on the path toward EU accession in the postwar period,” he said.
The programme had been designed in line with the fund’s new policy on lending under exceptionally high uncertainty, and strong financing assurances were expected from donors, including the G7 and EU, he added.
The US is the IMF’s largest shareholder and has contributed more to Ukraine in aid and military support than any other country. The US Treasury secretary, Janet Yellen, said: “An ambitious and appropriately conditioned IMF programme is critical to underpin Ukraine’s reform efforts.”
Joe Biden announced nearly half a billion more dollars of US military aid to Ukraine in February. That was in addition to the $112bn approved by Congress in 2022.
Rivalries for political and economic influence in Ukraine and its neighbours were thrown into sharp relief by two visits to the region this week. Japan’s prime minister, Fumio Kishida, travelled to Bucha, a town that has become a byword for the extreme brutality of Russia’s invasion. Meanwhile, China’s premier Xi Jinping was received by Vladimir Putin for a state dinner in Moscow, amid western concerns that China could bolster Russia’s war effort by supplying it with weapons.
While western allies have tried to set a narrative about the path to economic recovery in an independent Ukraine, Putin has likewise tried to lay claim to rebuilding efforts.
The Russian leader made a surprise visit to the occupied Ukrainian port city of Mariupol on Saturday and was presented with a report on reconstruction work in the city, according to the Tass news agency.