The IMF’s executive council on Monday approved a long-delayed payment of $ 700 million to Ukraine, which supports the war-torn country amid fears that Russia is planning a deeper invasion.
The new funds mark a second tranche of a $ 5 billion Stand-by arrangement program agreed in the spring of 2020 to help Ukraine deal with the pandemic. This follows a $ 2.7 billion IMF Special Drawing Rights (SDR) allocation extended to Ukraine this summer, as well as € 600 million in EU funding provided last month.
“Ukraine’s IMF-backed economic program aims to help the authorities address the effects of the Covid-19 shock, sustain the economic recovery, and pursue important structural reforms to reduce key vulnerabilities,” said the fund late Monday.
The arrival of these funds, as well as the extension of the IMF program until June 2022, provides a critical and timely financial cushion for Kiev.
U.S. and European officials sounded the alarm this month about a growing build-up of 90,000-114,000 Russian troops near the country’s borders. They, along with Ukrainian officials, warn that Moscow may be planning a deeper invasion after annexing the Crimean peninsula in 2014 and sparking a proxy-separatist war in the eastern Donbas region that claimed some 14,000 lives.
Multibillion-dollar financial support from the IMF, World Bank and other international financial institutions, as well as the US and EU, has been critical to supporting Ukraine since Russia began its aggressive policies.
The IMF tranche has been delayed for about a year by a combination of footsteps on reforms by President Volodymyr Zelensky’s administration and a constitutional court last fall verdict initiated by pro-Russian parties which threatened to sterilize newly established anti-corruption institutions.
Recent legislation passed by Zelensky’s ruling majority in parliament has addressed the IMF’s concerns by improving the independence of both anti-corruption bodies and the central bank.
Oleksiy Danylov, Ukraine’s national security chief, attended the Halifax International Security Forum over the weekend, calling on the US, EU and other Western supporters to step up military assistance and other forms of support for Kiev, while warning that the Russian President Vladimir Putin “understands only the language of violence”.
“By pulling troops to the Ukrainian border, Russia is trying to aggravate the security situation in the region as much as possible to increase interests at future talks on the table,” he added.