The International Monetary Fund (IMF) said it had approved an economic monitoring program for Ukraine which could help Kyiv secure funding from donors, with the war-torn country needing more than $40 billion this year.
The monitoring program “is designed to help Ukraine maintain stability and catalyze donor financing amid very large balance of payment needs and exceptionally high risks,” following the Russian invasion, the IMF said in a statement.
Ukrainian authorities are committed to economic and financial reforms, concerning in particular tax collection, the domestic debt market, transparency and the independence of the central bank, the IMF said.
They have four months to prove their progress as per the Program Monitoring with Board involvement (PMB) scheme, the statement said.
The framework of measures monitored by the IMF aims to pave the way for financing, which can “come from many sources,” said Gavin Gray, the IMF’s head of mission for Ukraine.
Ukraine needed between $40 billion and $57 billion to cover its budgetary and operating needs for 2023, Gray said.
Following the IMF’s recommendations would “give the donors the confidence to provide resources,” he said.
Russia’s invasion “continues to have a devastating social and economic impact on Ukraine,” with mounting civilian casualties and a third of the population displaced, IMF First Deputy Managing Director Gita Gopinath said in a statement.
“Notwithstanding all these strains, the authorities have largely managed to maintain macroeconomic and financial stability, and they are committed to continue adapting policies to fast-changing circumstances, including in the case of a severe downside scenario,” Gopinath said.
“Large and predictable external financial support will be critical for the success of the authorities’ strategy, and front-loaded disbursements would help address strains in early 2023,” she said.
If Ukraine successfully follows the monitoring program, it “should help pave the way toward a possible full-fledged IMF-supported program,” she said.
Gray stressed it was “too premature” to say how big the IMF program could be.
The IMF has provided $2.7 billion in emergency aid to Kyiv since the start of the Russian invasion of Ukraine in February.
The European Commission has just proposed aid of 18 billion euros ($19 billion) in 2023 in the form of loans.
