IMF proposes backing Ukraine through its administered fund until certainty reached with monetary program - managing director

MOSCOW. Oct 26 (Interfax) - The International Monetary Fund (IMF) is currently in talks with Ukraine but proposes supporting the country, which needs substantial amounts of financing, through an account, which has been specifically set up and administered by the Fund, until certainty is reached with the monetary program, IMF Managing Director Kristalina Georgieva said.

When asked about the possible coverage of Ukraine's budget deficit in 2023, which is estimated by Kiev at $38 billion without the monetary program with the IMF, she told Ukrainian journalists that the IMF had its administered account through which funds could be channeled for such payments to Ukraine. She added that the IMF had already paid $2.2 billion to the country from this Fund's administered account.

Georgieva noted on the sidelines of an international expert conference in Berlin on October 25 that in terms of the fund's resources, this was just the early days. She added that the IMF has been interacting with the Ukrainian government, and that next month the IMF would work to see at what stage, under what conditions and in what amount the Fund needed to finance the country.

She emphasized that in 2022, the Fund directly allocated $2.7 billion in emergency financing for Ukraine.

Speaking at the conference, the IMF chief noted that, according to the Fund's current estimates, in a best-case scenario, Ukraine's financing needs in 2023 would be about $3 billion per month, but taking into account some additional financing for higher gas imports and some repair of critical infrastructure, they would quickly reach $4 billion per month.

She emphasized that recent developments in Ukraine "lead us to consider $5 billion upper range."

"Our next step is to work with the Ukrainian authorities to prepare for Program Monitoring with Board Involvement - or PMB as it is known. This will help establish a macroeconomic framework and key near-term policies for Ukraine now [...]. The PMB would help catalyze urgently needed support from donors and pave the way for eventually moving to a full-fledged IMF program," the managing director said.

Ukrainian Prime Minister Denis Shmygal said at a press conference that the government estimated the need to finance the state budget deficit in 2023 at $3 billion to $4 billion per month. In 2022, Ukraine said it needed $5 billion a month in support, but so far it has never managed to raise it. The best figure was in August with $4.6 billion, and total foreign financing has amounted to $23.62 billion since the outbreak of the crisis, or over eight months, of which $10.5 billion is in grant funds and $1 billion in recovery funds.

The draft state budget for 2023, which has passed its first reading, envisions foreign funding for the deficit at $38 billion, or about $3.2 billion a month, including $15 billion from the IMF.