By David Lawder
WASHINGTON (Reuters) – The International Monetary Fund on Thursday said that “timely support” for Ukraine was needed from the United States and other international donors to ensure the country’s fiscal viability as it enters a third year battling Russia’s invasion.
IMF spokesperson Julie Kozack told a regular news briefing that the global lender estimates that Ukraine will need about $42 billion of financing this year, including official donor support of about $31.9 billion.
“Timely support from the international community, including the U.S., will be vital to ensure that the country remains on the path to fiscal and external viability,” Kozack said.
A $60 billion package of U.S. military and economic aid for Ukraine remains stalled by Republican U.S. House of Representatives Speaker Mike Johnson, days after Ukraine retreated from the eastern town of Avdiivka, partly due to ammunition and weapons shortages.
Kozack said an IMF team is currently in Warsaw to conduct a third review of Ukraine’s $15.6 billion IMF loan program, from which about $4.5 billion has been disbursed so far. She declined to discuss the size of another disbursement to Ukraine that could be approved once the review is complete.
IMF staff and Ukrainian officials are negotiating an agreement that could lead to a new disbursement of about $890 million, Reuters reported on Wednesday.
RUSSIAN ASSET RISKS
Asked about the IMF’s position on confiscating some $300 billion in frozen Russian assets to aid Ukraine, Kozack said those decisions were up to countries holding the assets.
“From our perspective, it is important that any actions have sufficient legal underpinnings to avoid potential risks. And these include risks of litigation, risks of countermeasures and risks to the international monetary system,” she added.
Regarding the effectiveness of Western sanctions on Russia, she said the Russian economy has performed above expectations, with the IMF forecasting 2.6% growth for 2024 after 3.0% growth in 2023. Russia’s 2025 GDP growth is forecast to slow to 1.1%.
“It’s also clear that Russia is now in a war economy,” she said, adding that military expenditures were boosting production, government social transfers were propping up consumption and inflation was rising.
Kozack said the IMF believes that Russia’s growth will be hurt in the medium term because of a lack of access to the dollar-based international financial system, reduced access to technology and the loss of some highly skilled labor from its workforce.
(Reporting by David Lawder; Editing by Paul Simao)
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