The IMF announced a staff level agreement on a proposed new 48-month Extended Fund Facility (EFF) to the tune of $8.2 billion.
The statement is actually glowing in its praise for the efforts of the Ukrainian authorities, particularly at time of war, with the clear message that Ukraine deserves a new extended program.
But, here is the rub, despite a $8.2 billion financing contribution from the IMF, it still reveals a near $140 billion financing gap for the duration of the program. This reflects budget/bop financing needs and is not all in, so excluding military support.
On that note the EC recently revealed the all-in estimated financing gap is €140 billion ($162 billion) for just 2026-27. Actually the annual cost of keeping Ukraine in the war is known to be close to $100 billion a year.
The message from the IMF and EC is both clear and stark, that Ukraine is desperately short of financing and with the US under Trump pulling its financial support that Europe is on the hook for billions of dollars or euros in financing over the next 3-4 years.
The fund is saying, yes, we support a new program, but only if you come up with hundreds of billions of dollars in new financing commitments.
The EC has made clear, I think, that it believes the only way that this financing gap can be filled is with the use of immobilized Russian Central Bank (CBR) assets. Actually, reading between the lines, I think the IMF is now saying the same thing.
And a clear message from the fund:
“The economy has continued to show resilience despite the recent intensification of attacks on energy and other critical infrastructure. However, risks to the outlook remain exceptionally high given uncertainty on the duration and intensity of the war, as well as the timing and level of additional international donor support. Prompt action by donors is indispensable to assist Ukraine in managing its large fiscal and external financing needs, and to avoid liquidity strains.”
Ukraine has done a remarkable job, but unless donors come up with the cash now, it is screwed.
Let’s hope European leaders come up with the CBR cash, and soon.
Reprinted from the author’s @tashecon blog. See the original here.
The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.