IMF approves $500 million in new tranche for Ukraine

Ukraine is set to receive another $500 million loan tranche from the International Monetary Fund (IMF), following the approval of the disbursement by the IMF Executive Board under the Extended Fund Facility (EFF).

According to an official statement published on June 30, the latest review marked the eighth under the EFF program, which was initially approved on March 31, 2023.

The disbursement brings the total amount allocated to Ukraine through the IMF-supported program to $10.6 billion.

The Fund highlighted that, despite the challenging circumstances facing the country, Ukrainian authorities had successfully met all quantitative performance criteria and fulfilled most structural benchmarks, which qualified them for the new tranche. This follows a previous $400 million disbursement granted in late March to support Ukraine’s state budget.

Meanwhile, Ukraine’s Ministry of Finance announced that the country will not proceed with a scheduled $665 million payment tied to GDP-linked warrants, citing the risk of default. These obligations, which are dependent on the country’s economic performance, were originally due for payment on June 2, based on 2023 GDP growth.

Although the debt was expected to be paid in 2024, the government had already imposed a moratorium on bond repayments. The moratorium will remain in effect until Ukraine can restructure its debt.

The Finance Ministry noted that the missed payment would not compromise Ukraine’s financial stability, thanks to agreements made with creditors last year to remove cross-default clauses from the bond contracts.

In addition to the IMF support, Ukraine received a €1 billion tranche from the European Union in June. These funds, derived from income generated by reinvesting frozen Russian assets, mark the fifth such EU disbursement. Prime Minister Denys Shmyhal confirmed that the money would be allocated to cover critical state budget expenses.

By Tamilla Hasanova