IMF approves $1.4 billion in emergency financing for Ukraine

The executive board of the International Monetary Fund (IMF) announced on Wednesday that it had approved $1.4 billion in emergency financing for Ukraine “to help meet urgent financing needs and mitigate the economic impact of the war.”

Although Kyiv previously canceled an existing stand-by lending arrangement with the global lender, Ukrainian authorities have said they would work with the global lender to design an appropriate economic program aimed at rehabilitation and growth when conditions permit.

According to a Reuters report, Ukraine’s alternate IMF Executive Director Vladyslav Rashkovan gave a passionate and profoundly emotional speech outlining the devastation suffered by the Ukrainian people at the hands of the Russian war machine – ultimately causing the board to break out into spontaneous applause.

“The Russian military invasion of Ukraine has been responsible for a massive humanitarian and economic crisis,” IMF Managing Director Kristalina Georgieva said in a press release.

“The tragic loss of life, huge refugee flows, and immense destruction of infrastructure and productive capacity is causing severe human suffering and will lead to a deep recession this year. Financing needs are large, urgent, and could rise significantly as the war continues.”

The board’s most senior member, Russian Executive Director Aleksei Mozhin, reportedly remained quiet for most of the meeting, but told his fellow board members, “I pray for peace.”

Ultimately, the $1.4 billion will be disbursed under the IMF’s Rapid Financing Instrument (RFI) – a financial tool that provides rapid financial assistance to member countries facing an urgent balance of payments need without the need of a full-fledged program.

The disbursement, which is equivalent to 50% of Ukraine’s quota in the IMF, “will help meet urgent balance of payment needs arising from the impacts of the ongoing war and will provide critical support in the short term while playing a catalytic role for financing from other partners,” the IMF’s announcement further read.

The RFI will provide rapid and low-access financial assistance to without the need of a full-fledged program. According to the IMF website, Kyiv can tap the RFI repeatedly within any three-year period if its balance of payments need “caused primarily by an exogenous shock.”

As the West continues to rally around Ukraine, President Zelensky’s government has managed to secure financial assistance from the United States and several European allies. Similarly, the World Bank announced on Monday that its executive board had approved a $723 million package of loans and grants for Ukraine.