Without US aid, Ukraine will be forced to take ‘unpopular measures’ – Bloomberg
9 February 2024 15:13
In the absence of assistance from the US in the near future, Ukraine will be forced to turn to the IMF. Therefore, the Ukrainian leadership is currently working on a “plan B” that provides for additional measures to meet the Fund’s requirements. This was reported by Bloomberg, according to 
An IMF mission is due to visit Ukraine next week, and the Ukrainian government is preparing a plan to propose to the Fund. The main points of this plan, according to the publication, should be:
- expanded sale of domestic bonds;
- tax increases;
- spending cuts.
These measures should guarantee the IMF that Ukraine will be able to service its debts, if there is no help from its allies, under the $15.6bn loan programme. However, it is not yet clear whether they will have to be implemented.
The visit of IMF representatives, led by Gavin Gray, head of the Fund’s mission to Ukraine, will begin on 12 February. After that, official talks will take place in Poland. They will decide whether Ukraine will receive the next tranche of $900 million.
In total, under the programme, Ukraine should receive $5.3 billion from the IMF this year. The Ukrainian government has been fulfilling its obligations to the Fund, but there are still concerns that the IMF will want additional guarantees in case the US assistance is not forthcoming. This was reported by an unnamed Ukrainian official.
“The key source of funds to replace the US funds will be the expansion of domestic government borrowing, the official said. Ukrainian banks are highly liquid, and the government expects them to continue to invest the cash they are holding back due to war risks in high-yield government bonds. According to the official, this could bring in at least $5 billion in revenue this year. He said the government could also raise taxes or cut spending if necessary,”
– the newspaper writes.
IMF lending programme
Ukraine agreed with the IMF on a new four-year, $15.6 billion loan programme in March 2023. It is designed in two stages. The first phase, which will last 12-18 months, is aimed at ensuring fiscal, price and financial stability. The second stage involves more in-depth measures aimed at macroeconomic stability, recovery and reconstruction of the country, and economic growth. At all stages, Ukraine should continue reforms, such as anti-corruption and governance, and refrain from tax cuts.
