Ukraine turns to IMF for additional funding

The National Bank of Ukraine (NBU) and the Ministry of Finance of Ukraine are discussing with the International Monetary Fund (IMF) options for supporting the country's economy and financial sector during martial law, the NBU said on Sunday.

According to the NBU, Ukraine asks to initiate the allocation of additional funding to it under the Fund's emergency support program for its member states – the Rapid Financing Instrument (RFI) .

RFI funding is capped at 50% of the country's quota per year and 100% of the quota on a cumulative basis (although these limits were raised to 100% and 150% respectively by the end of 2021 to counter the pandemic). Ukraine's quota in the IMF is SDR 2 billion, or $28 billion, the National Bank said. The financial terms of the RFI are similar to the terms of the Stand-By Arrangement, under which Ukraine is currently working with the Fund, the funds received shall be paid in 3.25-5 years.

RFI provides an opportunity for quick access to financial assistance to those countries that are faced with urgent balance of payments needs, in particular, as a result of military conflicts, the National Bank recalled.

The central bank said that the RFI is designed for cases where the launch of a full-fledged economic reform program is not possible. At the same time, the Member State requesting such assistance must cooperate with the Fund to resolve problems with its balance of payments and have a common list of economic and financial policies that it plans to implement for this purpose.

In addition, additional options for emergency financial support for Ukraine are being considered. IMF Managing Director Kristalina Georgieva assured that the IMF is actively working on all possible options for financial support for Ukraine.

The National Bank added that the World Bank Group also reacted to the situation in Ukraine. The parties are discussing a package of financial support under Second Economic Recovery Development Policy Loan.

In addition, the NBU said that the experts of the IMF positively assessed all the measures taken by the National Bank to ensure the continuity of the functioning of the financial system during martial law.

Source: www.en.interfax.com.ua