IMF Approves $400 Million Disbursement to Ukraine Amid Ongoing Conflict

The International Monetary Fund (IMF) has approved a $400 million disbursement to Ukraine, marking the seventh review under the country's Extended Fund Facility (EFF) program. This latest installment brings the total IMF support to Ukraine's state budget to $10.1 billion since the program's inception.

Initiated on March 31, 2023, the 48-month EFF arrangement provides Ukraine access to approximately $15.6 billion. The program aims to anchor policies that sustain fiscal, external, price, and financial stability, support gradual economic recovery, and promote long-term growth in the context of post-war reconstruction and Ukraine’s path to EU accession.

Despite the ongoing war with Russia, Ukraine's economy has demonstrated resilience. However, economic growth slowed in the second half of 2024 and is projected to continue slowing in 2025 due to a tight labor market and attacks on energy infrastructure. The IMF projects GDP growth to decline to 2-3% in 2025 from 3.5% in 2024, influenced by labor shortages, infrastructure damage, and the war.

IMF Managing Director Kristalina Georgieva acknowledged the severe social and economic consequences of Russia's war in Ukraine but noted that macroeconomic stability is being preserved, crediting substantial external support.

Ukrainian Prime Minister Denys Shmyhal expressed gratitude for the IMF's continued support, emphasizing that the financial assistance will help strengthen Ukraine's economic resilience amid the conflict. Finance Minister Sergii Marchenko highlighted the importance of cooperation with the IMF for maintaining fiscal and monetary stability and stimulating economic recovery.

The IMF emphasizes the need for sustained reform momentum, progress in domestic revenue mobilization, and timely disbursement of external support to safeguard macroeconomic stability, restore fiscal and debt sustainability, and improve governance.

Since Russia's full-scale invasion in February 2022, the IMF has provided substantial financial assistance to Ukraine. The EFF program, initiated in March 2023, is a continuation of this support, aiming to help Ukraine navigate the economic challenges posed by the ongoing conflict. Prior to the latest $400 million disbursement, the IMF had completed six reviews under the EFF, with the sixth review in December 2024 resulting in a disbursement of about $1.1 billion.

The IMF's Independent Evaluation Office has highlighted the need for an overhaul of the "exceptional access policy" to improve the credibility and effectiveness of the IMF, especially concerning high-risk repeat borrowers like Ukraine.

Ukraine's central bank governor, Andriy Pyshnyi, expressed optimism that Ukraine will not need to engage in monetary financing in 2025 to fund the government, citing successful domestic debt market activities, international aid, and internal resource mobilization.

This financial assistance from the IMF is crucial for Ukraine as it continues to navigate the economic challenges posed by the ongoing war. The funds are expected to bolster macroeconomic stability and support essential government functions during this period of heightened uncertainty.