The International Monetary Fund (IMF) on Wednesday approved a $1.4 billion emergency loan for Ukraine to help mitigate the economic impact of Russia President Vladimir Putin’s invasion.
“The Russian military invasion of Ukraine has been responsible for a massive humanitarian and economic crisis,” IMF Managing Director Kristalina Georgieva said in a statement after a meeting the fund’s executive board.
Georgieva predicted a deep recession in Ukraine this year amid the “tragic loss of life, huge refugee flows, and immense destruction of infrastructure and productive capacity.”
“Financing needs are large, urgent, and could rise significantly as the war continues,” she said. Once the war is over, Ukraine is likely to need additional “large support,” she said.
In a statement, the IMF said the funds come from its Rapid Financing Instrument (RFI), and will help fund urgent spending needs in the short term, while helping to catalyze financing from other partners.
The RFI provides rapid funding to IMF member countries without the need for a full-fledged program. Members can tap the RFI repeatedly within any three-year period if the balance of payments need is caused by an exogenous shock, according to the IMF website.
“The war in Ukraine is resulting in tragic loss of life and human suffering. While the outlook is subject to extraordinary uncertainty, the economic consequences are already very serious,” the IMF said.
Georgieva and the fund said the IMF and its executive board will remain closely engaged with Ukraine’s authorities, and expressed sympathy and “strong support for the Ukrainian people.”
The global lender said Ukrainian authorities had canceled an existing stand-by lending arrangement with the IMF, but would work with the fund to design an appropriate economic program focused on rehabilitation and growth when conditions permit.
Russian Executive Director Aleksei Mozhin, who is the board’s most senior member and serves as its honorary dean, spoke only briefly, telling board members: “I pray for peace,” Reuters reported.
The global lender said Russia’s invasion had already led to very serious consequences, noting that over 2 million Ukrainians have fled the country since Putin launched a full-scale invasion of the country on Feb. 24.
Putin describes the invasion as a “special military operation” to disarm Ukraine and detain leaders it claims are neo-Nazis. Ukraine and the West argue this is a false pretext used in an attempt to justify the invasion.
The IMF in December disbursed $700 million to Ukraine, and in August, Ukraine received $2.7 billion in IMF Special Drawing Rights, or emergency reserves.
On Monday, the World Bank announced a package of more than $700 million in emergency funding for Ukraine.
Reuters contributed to this report.
From The Epoch Times
