The National Bank of Ukraine and the International Monetary Fund are negotiating options to support Ukraine’s economy and financial sector at the time of the martial law.
IMF experts view positively all measures taken by the NBU to ensure uninterrupted functioning of the financial system at the time of the martial law. The two institutions are discussing further steps, in particular financial support from official lenders.
NBU Governor Kyrylo Shevchenko, as IMF governor for Ukraine, and Minister of Finance of Ukraine Sergiy Marchenko have applied to the IMF requesting to initiate the allocation of additional financing for Ukraine under the Rapid Financing Instrument (RFI), the emergency assistance program the IMF offers to its member countries.
The RFI provides prompt access to financial assistance to countries facing an urgent need to support their balance of payments, including as a result of military conflicts.
The RFI is designed for situations where a full-fledged economic program is impossible. At the same time, a member country requesting such assistance is required to cooperate with the IMF to make efforts to solve its balance of payments difficulties and to describe the general economic policies that it proposes to follow.
Access limits under the RFI are limited to 50% of quota per year and 100% on a cumulative basis. However, in response to Covid-19-related financing needs, the limits have been temporarily increased to 100% and 150% respectively to end-December 2021. Ukraine’s quota in IMF is SDR 2 billion or USD 2.8 billion. RFI has similar to SBA financial conditions. Obtained financial assistance should be repaid within 3¼ to 5 years.
Other options to provide Ukraine emergency financial support. IMF Managing Director Kristalina Georgieva assured that the IMF staff was exploring all options for further financial support to our country.
The World Bank Group has also responded to the situation in Ukraine. The members are discussing a package of financial support under the Second Economic Recovery Development Policy Loan Program.