Washington, DC : The Executive Board of the International Monetary Fund (IMF) today approved a disbursement of US$1.4 billion (SDR 1,005.9 million) under theRapid Financing Instrument (RFI)to help meet urgent financing needs and mitigate the economic impact of the war.
The Executive Board expressed its strong support for the Ukrainian people.
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, with refugee flows of over 2 million persons in just 13 days and large-scale destruction of key infrastructure in Ukraine. This disbursement under the RFI, equivalent to 50 percent 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 Ukrainian authorities have canceled the Stand-by Arrangement and the authorities have expressed their intent to work with the IMF to design an appropriate economic program aimed at rehabilitation and growth, when conditions permit. The authorities intend to remain in close consultation with staff as they continue to design and implement effective crisis mitigation measures.
Following the Executive Board discussion, Ms. Kristalina Georgieva, Managing Director and Chair, made the following statement:
The Russian military invasion of Ukraine has been responsible for a massive humanitarian and economic crisis. 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 emergency policy response of the Ukrainian authorities has been remarkable. Administrative and capital controls have been introduced to preserve the availability of foreign exchange reserves and reduce uncertainty regarding the exchange rate. To further support financial stability, the National Bank of Ukraine has established a new liquidity facility and introduced regulatory forbearance measures. While cash withdrawal limits have been imposed, cashless transactions have not been limited. Fiscal policy has focused on ensuring priority payments. Ukraine has stayed current on all debt obligations.
Against this extraordinary background, the IMF has approved critical financial support. This should be instrumental in catalyzing the large-scale mobilization of additional concessional financing that will be required to help fill the financing gap and mitigate the economic impacts of the war. Once the war is over and a proper damage assessment can be performed, additional large support is likely to be needed to support reconstruction efforts.
The Fund expresses its deepest sympathy to the Ukrainian people in these extraordinarily difficult times and will remain closely engaged with the Ukrainian authorities.