G7 and IMF weighing up to USD 40 bln in Ukraine aid package

The G7 and IMF are considering increasing financial aid to Ukraine of up to USD 40 bln, including already provided funds, the Reuters news agency reported on Feb. 10, citing an anonymous source. The idea is under discussion and it had not yet been formally raised with the IMF board, the source reported.

Previously on Jan. 21, Ukrainian President Petro Poroshenko requested the IMF to revise the existing stand-by arrangement for a new format known as the extended fund facility. Recall, the IMF stand-by program launched in April 2014 presumed unlocking USD 27 bln in financial aid from different donors (including USD 17 bln from the Fund) in two years. By the end of 2014, Ukraine received USD 4.6 bln from the IMF and USD 4.3 bln from other international donors.

Alexander Paraschiy: Talks about a possible increase in support for Ukraine is good news. Still what is much more important is Ukraine’s compliance with IMF requirements on austerity measures, which is critical for keeping aid money flowing from the West. Negotiations with the IMF mission are continuing and the talks are very tough, according to Ukrainian officials.

We expect a preliminary agreement to be reached by the end of this week in Kyiv since Ukraine’s budget law sets the deadline for revising the budget by Feb. 15. We do not expect any advances from the IMF and anticipate the Fund to approve a new wire for Ukraine only after the necessary spending cuts are approved by parliament.