Washington, Mar 9 (EFE).- The executive board of the International Monetary Fund (IMF) on Wednesday approved a disbursement of $1.4 billion in emergency financing support to Ukraine and warned that the war started by Russia will cause a “deep recession” in the country.
The amount approved by the Fund matches that requested by the Ukrainian government and will serve to “mitigate the economic impact” of the war, the IMF said in a statement.
“Financing needs are large, urgent, and could rise significantly as the war continues,” IMF Managing Director and Chair Kristalina Georgieva said.
“The tragic loss of life, huge refugee flows, and immense destruction of infrastructure and productive capacity is causing severe human suffering and will lead to a deep recession this year,” she warned.
The IMF said that the Ukrainian authorities had “canceled the Stand-by Arrangement,” a mechanism by which the agency provides financing to economies in crises, reached in 2020 and of which there were still some $2.2 billion to be disbursed.
However, Ukraine has expressed its “intent to work with the IMF to design an appropriate economic program aimed at rehabilitation and growth, when conditions permit,” the Fund added.
The emergency aid to Ukraine will be delivered under the IMF’s rapid financing instrument, which allows emergency financial assistance to member countries without the need for them to have a full-fledged loan program in place.
The disbursement of $1.4 billion, equivalent to 50 percent of Ukraine’s quota in the IMF,”will help meet urgent balance of payment needs arising from the impacts of the ongoing war and will provide critical support in the short term while playing a catalytic role for financing from other partners,” the statement said.
On Saturday, the IMF said that the war in Ukraine will have a “severe impact” on the world economy and warned that countries with “close economic links” with Kiev and Moscow are exposed to greater risks.
As a result of these pressures, Moldova has already requested an “augmentation and rephasing” of its existing loan program with the IMF, and the Fund’s staff are currently discussing different options with the Moldovan authorities. EFE