Kiev hopes to unlock money from the Washington-based institution even if the Senate aid package remains stalled
FILE PHOTO: Ukrainian soldiers look towards Russian positions while atop an anti-aircraft gun. © John Moore / Getty Images
Ukraine is considering a contingency plan to secure money from the IMF if a $60 billion US aid package, currently stalled in the Senate, remains blocked, Bloomberg reported on Friday, citing people familiar with the matter.
According to the outlet, Ukrainian officials will lay out the backup plan during a visit by an IMF delegation to Kiev next week as the country confronts an “exceptionally high” budget gap.
The measures being considered, which will reportedly include tax hikes, spending cuts, and increased domestic bond sales, are needed to convince the Washington-based financial institution that Ukraine will be capable of servicing the IMF loan if its Western sponsors fail to provide aid.
The visit comes ahead of the IMF’s review of the existing loan program, which will start later this month and could unlock a $900 million tranche of aid, the article stated.
The IMF approved the four-year loan to help Ukraine cover its budget shortfall last year. Kiev is scheduled to receive $5.3 billion from the program this year.
Commenting on Kiev’s “plan of action” ahead of the IMF visit, the Ukrainian central bank told Bloomberg that the “measures envisaged by Plan B” will potentially include “activation of the domestic borrowing market, fiscal optimization and consolidation.”
However, the central bank and Finance Ministry say there’s a risk that the IMF will turn down the funding without a fiscal plan if the US fails to provide financial aid, the outlet said.
US lawmakers in the House of Representatives have blocked a bill requested by US President Joe Biden for a new aid package worth $60 billion, most of which is earmarked for weapons.
Ukraine’s Finance Ministry estimated in December Kiev’s fiscal needs for 2024 at $37.3 billion, after more than $42 billion in foreign aid was received in 2023.
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