The International Monetary Fund (IMF) says its executive board has approved $1.4bn in emergency funding to support Ukraine in the wake of Russia’s invasion, now in its third week.
“This disbursement … 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 IMF said in a statement on Wednesday.
It added that Ukrainian authorities had cancelled an existing stand-by lending arrangement with the IMF, but would work with the fund to design an appropriate economic programme focused on rehabilitation and growth when conditions permit.
“The Russian military invasion of Ukraine has been responsible for a massive humanitarian and economic crisis,” IMF Managing Director Kristalina Georgieva said after the meeting, predicting a deep recession in Ukraine this year.
“Financing needs are large, urgent and could rise significantly as the war continues,” she said. Once the war was over, Ukraine was likely to need additional “large support”.
The disbursement will be made under the IMF’s Rapid Financing Instrument (RFI), which provides rapid funding to member countries without the need for a full-fledged programme.
Members can tap the RFI repeatedly within any three-year period if the balance of payments need is caused by an exogenous shock, according to the IMF’s website.
It comes on top of $700m disbursed to Ukraine by the IMF in December, and $2.7bn in IMF Special Drawing Rights, or emergency reserves, that Ukraine received as part of an IMF allocation in August.
Vladyslav Rashkovan, Ukraine’s alternate executive director at the IMF, reportedly gave an emotional speech at the board meeting about the devastation caused by the war and its effect on the country’s people.
His remarks were met with spontaneous applause, a rare event at such meetings.
Russian Executive Director Aleksei Mozhin, who is the board’s most senior member and serves as its honourary dean, spoke only briefly, telling board members: “I pray for peace,” a source familiar with the meeting told Reuters news agency.
Russia calls the assault a “special military operation”.
The IMF said the war had already resulted in very serious consequences, citing the flight of more than two million people from the country in 13 days and large-scale destruction of key infrastructure.
The World Bank’s executive board on Monday approved a $723m package of loans and grants for Ukraine.