Ukraine and IMF Agree to Continue Four-Year Programme with €15 Billion Funding
Agreement Reached on Programme Terms
The International Monetary Fund (IMF) and Ukraine have agreed to continue a four-year programme with a total volume of over €15 billion (US$15.5 billion), reported German news agency (dpa). This agreement is seen as a crucial step in maintaining Ukraine’s financial stability in the face of uncertainty. Finance Minister Serhiy Marchenko emphasized the importance of effective cooperation with the IMF, stating, “Effective and well-coordinated cooperation with the IMF is one of the key elements in maintaining Ukraine’s financial stability in the face of uncertainty. Ukraine continues to work fruitfully on the implementation of the jointly agreed reforms.”
Further Payments Expected in 2023
As part of the agreements made in 2023, Kyiv expects further payments of around €5.4 billion. The IMF programme is part of an international support package amounting to slightly more than €142 billion for the years 2023 to 2027.
Risks to Economic Outlook Remain High
The Ukrainian central bank has stated that risks to the country’s economic outlook “remain exceptionally high” in its statement. Without foreign aid, Ukraine’s budget deficit would stand at 19.6 per cent of the country’s gross domestic product (GDP). A value of three per cent is considered the threshold for financial stability.
State Budget Financed Half from Abroad
The state budget of the country invaded by Russia in 2022 is financed about half from abroad. Annually, around €40 billion of foreign funds are necessary.
US Support Crucial for Ukraine’s Budget
A potential loss of US support could put Kyiv under severe pressure. According to the Ukrainian Finance Ministry, the United States contributed an average equivalent of about €10 billion annually to Ukraine’s budget. The previous day, talks between US President Donald Trump and Ukrainian President Volodymyr Zelensky at the White House were cut short, with a planned cooperation agreement in the commodity sector left unsigned.
Conclusion
The agreement between the IMF and Ukraine is a significant step towards maintaining the country’s financial stability. However, the risks to the country’s economic outlook remain high, and the loss of US support could have severe consequences. It is crucial for Ukraine to continue to work on implementing the jointly agreed reforms and to maintain a strong relationship with international partners.
FAQs
* What is the volume of the IMF programme?
The programme has a total volume of over €15 billion (US$15.5 billion).
* How much will Ukraine receive in further payments in 2023?
Ukraine will receive around €5.4 billion as part of the agreements made in 2023.
* What is the threshold for financial stability in terms of budget deficit?
A value of three per cent of the country’s gross domestic product (GDP) is considered the threshold for financial stability.
* How much foreign aid does Ukraine require annually?
Ukraine requires around €40 billion of foreign funds annually.
* What is the significance of US support for Ukraine’s budget?
The United States contributed an average equivalent of about €10 billion annually to Ukraine’s budget, making US support crucial for the country’s financial stability.