International Monetary Fund (IMF) announced that it has agreed on a $15.6 billion loan package for Ukraine, according to its statement on Tuesday.
The package’s first 12 to 18 months focus on lessening pressure on the government’s budget and balancing its massive deficit to a degree.
The remaining period of the four-years package is to be devoted to post-war reconstruction, and the support of Ukraine’s efforts to be a European Union (EU) member.
The loan package is considered to be a positive indictor for governments and financial institutions presenting potential financial supporters to Ukraine, such as the EU.
It “is expected to help mobilise large-scale concessional financing from Ukraine’s international donors and partners,” the IMF’s mission chief for Ukraine Gavin Gray said.
The IMF also stated it found Ukraine has “demonstrated their commitment to healthy economic policy and met all agreed upon goals during a preliminary consultation,” reported by the AP news agency.
Ukraine has been relying on money printed by the central bank and loaned to the government. Such measure, if sustained for a long period, could increase inflation and destabilise the Ukrainian currency.
Ukraine’s budget has been weighed down due to increased military spending following the war with Russia. The Ukrainian economy is reported to have shrunk by 30 percent approximately in 2022.
Although lending to a country in a war goes against previous practice of IMF, new rules allow providing assistance under circumstances of exceptionally high uncertainty.
