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Ukraine is preparing a plan for IMF in case of termination of US aid

Feb 9, 2024

Ukraine is preparing a plan that includes expanding sales of domestic bonds, raising taxes, and cutting spending to close a budget gap. It is necessary to get money from the International Monetary Fund if vital US aid remains blocked.

This was reported by Bloomberg.


According to the publication, Ukrainian officials intend to propose this plan to the IMF during the visit of the Fund's staff to Kyiv next week. These measures are necessary to assure the IMF that Ukraine will be able to service its debts if its allies fail to provide assistance, which is a condition of its $15.6 billion loan program.

IMF staff, led by Gavin Gray, head of the fund's mission to Ukraine, will arrive in Kyiv for three days starting February 12, before official talks on Ukraine in Poland, the sources said. The visit precedes the IMF's review of the loan program, which will begin in February and will allow for a $900 million tranche.

The Finance Ministry and the National Bank of Ukraine have warned that there is a risk that the IMF Board of Directors will not approve the next disbursement of the loan without a budget plan if US funds remain blocked, an anonymous Ukrainian official said. This year, Kyiv was to receive $5.3 billion under the IMF program.

According to the official, the key source of funds to replace the US funds will be the expansion of domestic government borrowing. Ukrainian banks are highly liquid, and the government expects them to continue investing the funds they are holding back from lending because of military risks in high-yielding government bonds.

This could bring in at least $5 billion in revenue this year, the official said. The government could also raise taxes or cut spending if necessary, the official said.

Author – Anastasiya Glotova, 09/02/2024

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