Good news for kyiv. The Ukrainian government and the International Monetary Fund (IMF) reached an agreement on Tuesday on the fourth review of the aid program in place in the war-torn country, opening the door to the payment of a new tranche of 1.1 billion dollars.
This, which still needs to be validated by the IMF’s board of directors, will bring the funds paid to Ukraine so far to $8.7 billion, out of a total of $15.6 billion under the international institution’s aid program. A program that is part of a major international aid plan totaling $122 billion, approved in March 2023 by all the countries supporting Ukraine since the start of the Russian invasion at the end of February 2022.
Reducing the debt burden to sustainable levels
This program is essential for kyiv. The Fund believes that, despite the difficult conditions caused by the ongoing conflict, the Ukrainian government, thanks to external support, has been able to “support financial and macroeconomic stability.”
Among the recent measures put in place, the Ukrainian government announced at the end of July that it had reached an agreement allowing the partial restructuring of its external debt, for an amount of 20 billion dollars. An agreement which should allow for savings of 11.4 billion dollars over the next three years and 22.75 billion by 2033, the Ukrainian Ministry of Finance had then specified.
The IMF called the agreement “an important step in the authorities’ overall strategy to restore debt sustainability.” It said the Ukrainian authorities’ restructuring strategy and other measures “will be essential to reduce Ukraine’s debt burden to sustainable levels, thereby creating room for essential spending and supporting growth.”
Fragile growth
Because the country’s economic situation remains fragile, even though growth reached 6.5% over one year in the first quarter of this year, with inflation limited to 5.4% over one year. The IMF expects an “economic slowdown in the second half of the year due to repeated attacks on energy infrastructure and the consequences of the war on the workforce and confidence,” explained the mission chief, Gavin Gray.
As Moscow continues to target the country’s electricity grid, kyiv said Tuesday it is preparing for “Russian plans to destroy energy” during a winter that promises to be harsh. And it is making the protection of the energy sector one of its top “priorities”.
US and British Foreign Ministers Expected in kyiv
US Secretary of State Antony Blinken took the train to kyiv with British Foreign Secretary David Lammy, whose two-month-old Labour government has pledged to remain one of Ukraine’s main supporters.
Having left the Polish border town of Przemysl early on Wednesday morning, the two men will meet Ukrainian President Volodymyr Zelensky in kyiv, who has been demanding weapons with greater firepower and fewer restrictions from the West.
