International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva has said that greater external funding, especially fast disbursing grants, are needed to help maintain macroeconomic and financial stability in war-torn Ukraine.
Ms Georgieva in her opening remarks during the Ukraine Roundtable where the country’s Prime Minister Denys Shmyhal was also present as part of the IMF and World Bank’s Spring Meetings, further said that “without additional support, the great efforts made by the Ukrainian authorities to maintain macroeconomic and financial stability—in the face of enormous shocks and terrible circumstances — will become even harder to sustain”.
She emphasised on the importance of external finance in supporting Ukraine, including from bilateral donors and the multilateral institutions like the World Bank.
“It is financing like this, together with careful controls on cross-border operations since February 24, that has kept the central bank’s foreign exchange reserves stable relative to the pre-war level. On the fiscal side, it has supplemented domestic revenues without excessive recourse to monetary financing,” she said.
Ms Georgieva noted that the losses of physical infrastructure and human capital are already huge in that country and will lead to a deep recession this year.
“While subject to considerable uncertainty, we estimate that over the next two to three months some $5 billion a month may be needed simply to allow the government and the economy to continue to operate in the midst of the war,” she added.
Earlier this week, IMF in its “World Economic Outlook” had projected that Ukraine’s GDP will shrink by almost 40 percentage points.
The IMF chief further said that while the priority now is to keep the Ukrainian government and economy functioning, “we also need to prepare for the future — and we know that reconstruction needs will be massive. It is right to start this conversation early, so the prospects of a vibrant economy are a source of inspiration for the Ukrainian people at their most difficult times”.
She said that IMF has played its part through a $1.4 billion Rapid Financing Instrument that was agreed less than two weeks after the invasion.
“And last week we established an Administered Account for Ukraine that will provide donors with a secure vehicle to direct financial assistance to Ukraine. Here, I would like to thank Canada, whose recent federal budget proposed up to 1 billion Canadian Dollar, will be disbursed to Ukraine through the Administered Account,” Ms Georgieva added.