Ukraine counts on $5 bln from IMF to close gap in financing 2023 state budget – PM

KYIV. Feb 24 (Interfax-Ukraine) – To completely close the financing of the state budget deficit in 2023 in the amount of $38 billion, Ukraine has to find about $5 billion, the government expects that it will be provided by the International Monetary Fund (IMF), Prime Minister Denys Shmyhal said in an interview with the Ukrainian edition of Forbes.

“Now, taking into account all the agreements, in order to close the deficit, we need about $5 billion more. We plan to attract them from the IMF, negotiations on this matter have already begun,” the prime minister said.

He recalled that at a meeting held this week in Kyiv with IMF Managing Director Kristalina Georgieva, the results of the IMF monitoring mission, which Ukraine successfully passed, were discussed, which made it possible to start negotiations on a full-fledged 4-year support program worth more than $15 billion, which Kyiv would like to start already in the first quarter of this year. According to Shmyhal, it will consist of two parts: immediate financial support, which Ukraine counts on during the war, and a post-war reconstruction program.

“We are still discussing the distribution of tranches. Most likely, the amount will be divided into several quarterly tranches. We expect that the first tranche will be received in the first or second quarter of this year,” the prime minister said.

He recalled that macro-financial assistance had already been announced in the form of a concessional loan from the European Union for EUR 18 billion, and $10 billion from the US grant funding should be received by September.

“There are agreements to allocate $7.5 billion from Norway within five years. And this year we expect $1.5 billion from Canada. There are also agreements on smaller amounts with other countries,” Shmyhal said.

He recalled that last year Ukraine managed to attract more than $31 billion in external grants and loans – 38% and 62%, respectively.

Answering a question about the financing of the rapid recovery plan in 2023, estimated in total at $17 billion, the prime minister confirmed that more than UAH 150 billion ($4.1 billion at the current exchange rate) has been secured so far.

Of this amount, UAH 17 billion confiscated from the subsidiaries of the Russian state-owned banks Prominvestbank and IR Bank lie on a special account with the State Fund for Eliminating the Consequences of Russian Aggression, another UAH 35.5 billion should be transferred by the National Bank as profit for 2022.

“Some $1.5 billion is the money that the United States will provide, they have already been agreed by the Congress. Separately, $0.8 billion was allocated by the United States for the restoration of energy infrastructure … During the Ukraine-EU summit, the head of the European Commission, Ursula von der Leyen, promised EUR 1 billion for a rapid recovery program,” the head of government said.

According to him, the following priorities have been set within the rapid recovery program with proposed funding: restoration of power generation and power grids – $5.8 billion; clearance of territories – $0.4 billion; restoration of damaged housing – $3.2 billion; restoration of critical infrastructure – $5.7 billion; economic recovery (programs for small and medium-sized businesses, including eWork and the 5-7-9% loan program) – $3.8 billion.