IMF officials predict that the United States will continue to play a crucial role in assembling international assistance that has helped kept Ukraine’s economy afloat during Russia’s incursion.
In spite of that, Congress recently approved a short-term financing plan that prevented a shutdown of the U.S. government but eliminated $6 billion in aid to Ukraine. The possibility of restoring that aid installment is unclear, as are when, if, and how.
According to Kiel, Germany’s Institute for the World Economy, the U.S. has already sent or committed $69.5 billion in military, financial, and humanitarian aid to Ukraine.
At a news conference on Wednesday in Kyiv, Uma Ramakrishnan, the deputy head of the IMF’s European department, stated that he is totally dedicated to helping Ukraine. Therefore, from our perspective, the underlying presumption is still that the United States is still committed.
“It is premature for us to comment on what will materialise or not,” she continued, “because we have to wait for the process to play out.”
IMF officials in Washington noted that the economy of Ukraine was surprisingly resilient despite significant harm from Russia’s war.
After a terrible loss of around a third of its output in 2022, including due to war destruction and currency devaluation, the Ukrainian economy has seen increasing growth and decreased inflation this year.
Foreign financial assistance, which receives less attention than military supplies but enables Ukraine keep paying civil servants and pensions, has been crucial to this progress. Additionally, it has prevented people’s salaries and savings from disappearing as a result of price increases.
The financial assistance allows Ukraine’s government to pay its bills without having to manufacture money from the central bank, something it had to do in an emergency in the early days of the invasion but which can cause inflation to soar.
Inflation on an annual basis decreased from 26% in January to 8.6% in August. On Monday, the central bank decided to abandon the fixed exchange rate put in place at the beginning of the conflict because it felt confident in the stability of the Ukrainian currency.
Over a four-year period, the IMF will loan $15.6 billion to Ukraine. This should pave the way for a total donation of $115 billion from donor nations, which will take care of the government’s funding requirements. The IMF loan aids in raising money from other donors who are encouraged by the IMF’s assessment of Ukraine’s economic policies and demands to strengthen governance and combat corruption.
According to IMF Ukraine mission leader Gavin Grey, Ukraine is “making good progress” towards drafting legislation establishing a specialised anti-corruption prosecutor. Prior to a deadline in December specified in the financing arrangement, bills were introduced in September.
Prior to the war, IMF loan agreements with Ukraine had stalled because of a lack of progress in eradicating corruption and the influence of politically powerful businessmen. Since the invasion, these billionaires have maintained a low profile, and President Volodymyr Zelenskyy has dismissed a number of senior government figures suspected of misbehaviour to demonstrate his commitment to eradicating corruption.
According to deputy mission leader Nathan Epstein, Ukraine’s economy “is certainly adapting to the war environment and showing remarkable resilience,” with rising consumer demand fueling expansion.
He continued by saying that this year’s economic growth should be in the higher end of the 1%–3% IMF prediction range.