IMF opens account to transfer funds to Ukraine

The IMF has opened an account to transfer money from donors to Ukraine, as countries opposed to Russia’s invasion seek to put more pressure on Moscow.

The account, which was approved by the lender’s board of directors on Friday evening, will receive grants and loans “to assist Ukraine in meeting its balance of payments and budgetary needs and to help stabilize the economy of this country”. IMF said in a statement.

The aid, which will be disbursed directly to Ukraine’s account at the fund, may be denominated in reserve currency or special drawing rights, a form of reserve asset that effectively constitutes newly minted money.

The fund added: “Donors will benefit from the IMF’s tried-and-true infrastructure to rapidly deliver authenticated payments.

The fund said the government of Canada has proposed up to $795 million be allocated into the account as part of its latest federal budget, an amount available for use by any other members as well. as intergovernmental organizations want to “use it as a means to provide financial support” to Ukraine.

Last month, the IMF said it was working with bilateral donors, who had asked them to establish an instrument through which they could channel resources to support Ukraine, in the form of grant aid. back and lend.

“Ukraine is in dire need of cash,” said Timothy Ash, senior strategist at BlueBay Asset Management. “The tax receipt has collapsed due to war. They have a huge financial hole and the West needs to really step up to fill it or they will be forced to roll back. [National Bank of Ukraine] Financially, there will obviously be inflation and will put pressure on hryvnia. “

At the beginning of March IMF approved $1.4 billion emergency loan to Ukraine under the country’s Express Financing Instrument, has been disbursed.

Ukraine’s finance ministry said this week that in addition to a $1.4 billion loan from the IMF, the country has received a 1.2 billion euro loan from the EU, half of which has been disbursed and a support package worth $3 billion from the World Bank. , of which $350 million was disbursed. The World Bank has raised an additional $575 million from member countries in the form of grants and loan guarantees.

The European Bank for Reconstruction and Development announced a 2 billion euro “resilience package” for Ukraine last month, and the European Investment Bank provided a 639 million euro aid package. France, Italy and Canada added about $940 million in aid.

Last month, USA Congress approved $13.6 billion military and humanitarian assistance to Ukraine.

There have been repeated calls for rich countries to use the IMF’s reserve assets to support Ukraine, of which the IMF allocated $650 billion last August as part of its response to the coronavirus pandemic. .

The SDRs are distributed among the 190 IMF member countries roughly in proportion to their share of the global economy. Countries in the group of the world’s richest economies G7 received about 290 billion USD. Ukraine received 2.65 billion USD.

G7 members promised to transfer $100 billion of their SDRs to countries with greater need, although only about $60 billion had been pledged by 13 countries in the form of loans when Russia launched the call. Latest attack in February.

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