IMF board approves $1.3 billion in emergency funding for Ukraine

The International Monetary Fund said on Friday its executive board approved Ukraine's request for $1.3 billion in additional emergency funding to help sustain its economy as it battles Russia's attacks.

The funds will come from a new emergency lending program to address food shortages approved by the IMF board last month. Ukraine also requested program monitoring with board involvement to strengthen the policy commitment and further catalyze donor support, the IMF said.

IMF Managing Director Kristalina Georgieva welcomed the decision on Twitter. "This is vital to help catalyze urgently needed donor support and help pave the way for a full-fledged fund program," she said.

In a statement issued later, Georgieva said that member governments now supporting Ukraine financially have pledged to ensure that the country can service its existing debts to the Fund.

This gets around an IMF rule that requires borrowers to demonstrate debt sustainability - an assessment that would otherwise be unlikely given the uncertainties surrounding the crisis and Ukraine's needs.

"The balance of probabilities suggests that there are higher risks of debt being unsustainable," Georgieva said.

The IMF said the crisis, which began on February 24, had caused "tremendous human suffering and economic pain," and forecast a 35% contraction in Ukraine's gross domestic product in 2022. Ukrainian President Volodymyr Zelensky thanked the IMF and said the money would go to Ukraine on Friday.

The IMF said the disbursement under its Rapid Financing Instrument was equivalent to 50% of Ukraine's quota, and would help the country meet urgent balance of payment needs, including those caused by a large cereal export shortfall.

The additional financing would also play a catalytic role for further financial support from Ukraine's other creditors and donors, the IMF said.

It said Ukrainian authorities deserved "considerable credit for having maintained an important degree of macro-financial stability in these extremely challenging circumstances."

The board approved the funds - on top of $1.4 billion the IMF provided to Ukraine after the Russian attack - following a meeting that lasted over 100 minutes, one source familiar with the decision said.

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