IMF Ukraine loan payout jeopardized by Russian invasion uncertainty

IMF loan payouts for Ukraine are in jeopardy after the uncertainty caused by Russia’s invasion led board members to question whether they have leeway under fund rules to approve more disbursements, according to people familiar with the matter.
 

International Monetary Fund executive directors at an informal meeting on Friday highlighted the political and economic risks from the war, according to the people, who asked not to be named discussing the closed-door meeting. While they expressed support for the Ukrainian people, they also voiced concern for the war’s implications for the country to repay its current loan approved in 2020 and meet its conditions, the people said.

Having a reasonable chance of repayment and meeting requirements laid out for legal overhauls and economic performance are typically prerequisites to receiving IMF disbursements, helping to protect the fund’s resources and spur recommended changes.

Ukraine also has made a new request for emergency financing, IMF Managing Director Kristalina Georgieva said in a statement, without specifying the amount. That potential funding, should it be approved, could come with fewer strings attached.

“This week’s events in Ukraine are a matter of grave concern,” Georgieva said. She said she assured IMF board members that the fund will work “to support Ukraine in every way we can.”

The IMF press department declined to comment on Friday’s board discussion beyond Georgieva’s statement.

President Volodymyr Zelenskiy’s beleaguered government has been counting on the IMF to unlock the next $700 million from a $5 billion loan for Ukraine approved in 2020.

The IMF is “exploring all options for further financial support,” including under the existing loan arrangement, of which $2.2 billion remains to be disbursed, Georgieva said. 

Money for Ukraine was meant to be disbursed at the start of the loan and over four reviews scheduled every three to five months, though the first review was delayed from September 2020 to November 2021. 

The IMF staff’s latest review of the aid program began on Wednesday.