Whether the program is implemented hinges on a range of conditions, including endorsement from Group of Seven nations, and Ukraine’s donors and creditors ensuring the sustainability of the country’s debt.
The plan would also require changes to IMF lending rules so the fund could lend to the war-torn country, and the government in Kyiv would need to commit to a series of policies, on top of successfully completing a four-month non-cash IMF program approved last year, according to the people, who asked not to be identified because they’re not authorized to discuss the issues publicly.
If approved, the three- to four-year program - worth $14 billion to $16 billion total - will assume a disbursement of $5 billion to $7 billion in the first year, according to the people. There’s hope the plan will be agreed on by the end of March, with the first tranche coming as early as in April in the best-case scenario, they said. It’s also expected to help propel more financial support for the country from public and private creditors.
The IMF "remains closely engaged” with Ukraine, the fund said in a statement in response to questions from Bloomberg News, adding the cooperation "could pave the way toward a fully-fledged program,” without elaborating on details such as the potential size of a loan.
If the plan doesn’t get the support from enough IMF member countries, the fund could back Ukraine with a $1.3 billion Rapid Financing Instrument program, according to two of the people.
Under the current program with the IMF, the Ukraine government has committed itself to take measures to boost tax revenue, significantly reduce the central bank’s support of its war-battered budget and further improve corporate governance at state-run companies.
When the war ends, Ukraine will need major financial support to finance its reconstruction. Recent Russian attacks targeted civilian infrastructure, and particularly the power grid, in a bombing campaign that wrought damage across the country, leaving millions of people and businesses without reliable supplies of electricity, heat and water.
Economic recovery may be slow. Ukraine’s economy is expected to grow 0.3% after a 30.3% decline last year, the country’s central bank said.
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