The first tranche of $2.7 billion USD from the International Monetary Fund (IMF) has been transferred to the general fund of the state budget of Ukraine, the Ukrainian Ministry for Finance announced on April 3. This is an unprecedented loan – the first wartime loan the IMF has ever given in its 77-year history.

The funds were received under a new four-year Extended Fund Facility (EFF) Program for Ukraine, which totals $15.6 billion over the next four years.

“Ukraine [has now] received the first tranche under the new IMF program. Thanks to the funds received, we are able to continue to maintain economic stability in Ukraine, as well as to ensure priority expenditures of the state budget,” said Minister of Finance of Ukraine Sergii Marchenko.

The World Bank estimates that Ukraine’s total reconstruction cost is some $411 billion – which is double the country’s annual Gross Domestic Product.

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The new IMF program envisions “a set of macroeconomic and financial policies to support the economic recovery of Ukraine,” Ukraine’s Finance Ministry said on March 22.

According to the Ministry: “The program will help to mobilize financing from Ukraine’s international partners, as well as to maintain macro-financial stability and ensure the path to post-war reconstruction after Ukrainian victory in the war against the aggressor.”

The Ministry statement today noted that the EFF program includes two phases:

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“The first phase, planned for 2023-24, will focus on implementing a robust budget for 2023 and increasing revenue mobilization, including by avoiding new measures that might erode tax revenues.

“The first phase also provides inflation reduction and stability of exchange rate, including through maintaining adequate foreign exchange reserves. In addition, measures to promote long-term financial stability are expected, including by preparing a deeper assessment of the banking sector health and further promoting central bank independence.”

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The Ministry said that in the second phase of the program “the focus will be on reforms that will help to support post-war recovery and reconstruction as efficiently as possible, and will help Ukraine implement the necessary measures on the way to European integration. Long-term economic growth is also one of the priorities of the second phase of the EFF program.”

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