27 Feb 2023 14:59

Ukraine expects IMF to grant it $5 bln to close deficit of state budge financing in 2023

MOSCOW. Feb 27 (Interfax) - Ukraine needs to find about $5 billion to fully close the deficit in the state budget financing in 2023 totaling $38 billion, the government expects the International Monetary Fund (IMF) to grant them, Ukrainian media outlets said, quoting Ukrainian Prime Minister Denis Shmygal's interview with Forbes Ukraine.

"Now, in light of all agreements, we need about $5 billion to close the deficit. We're planning to attract them from the IMF, talks about it are already underway," he said.

He mentioned that the results of the IMF monitoring mission were recently discussed at a meeting with IMF Managing Director Kristalina Georgieva in Kiev, and that Ukraine successfully completed this mission, thus enabling the start of talks about a full-scale four-year-long support program worth over $15 billion, which Kiev would like to start as early as in the first quarter of 2023. According to Shmygal, it will comprise two parts, immediate financial support and the post-crisis recovery program.

"We're still discussing the division of tranches. The amount is most likely to be divided into several tranches every quarter. We expect to receive the first tranche in the first or second quarter of this year," Shmygal said.

Macrofinancial assistance in the form of the European Union's concessional loan of 18 billion euros has already been announced, and $10 billion in grants should be received from the United States before September, he said.

"There are agreements on the allocation of $7.5 billion from Norway in five years. And we're expecting $1.5 billion from Canada this year. We also have agreements about smaller amounts with other countries," Shmygal said.

He mentioned that Ukraine managed to attract over $31 billion in external grants and loans, 38% and 62% respectively, in 2022.

Answering a question about financing of the rapid recovery plan estimated at $17 billion in 2023, Shmygal reiterated that over 150 billion hryvni ($4.1 billion at the current exchange rate) were secured by now.

"One and a half billion dollars is the money which the U.S. will provide, it has already been agreed with the Congress. The U.S. allocated $800 million separately to the restoration of the energy infrastructure. [...] European Commission President Ursula von der Leyen promised 1 billion euros for the rapid recovery program during the Ukraine-EU summit," the prime minister said, listing some sources of financing.

The rapid recovery program envisages the following priorities with expected funding: restoration of energy generation and power grids $5.8 billion, mine clearance of territories $400 million, reconstruction of damaged housing $3.2 billion, restoration of the critical infrastructure $5.7 billion, economic recovery, including programs for small- and medium-sized business, such as eWork and the 5%-7%-9% credit program, - $3.8 billion, he said.

A meeting of the Donor Coordination Platform for Ukraine, the so-called "Financing Ramstein" at the highest political level of presidents and premiers will take place in Washington, D.C., during the Spring Meetings 2023 of the IMF and the World Bank in early April, Shmygal said.

"We will discuss long-term cooperation in such aspects as financing of the deficit of the budget, the rapid recovery plan, the great recovery, or the Marshall Plan for Ukraine, and insurance of military risks," he said.

The IMF and WB Spring Meetings will take place in Washington, D.C., on April 10-16, 2023.