The International Monetary Fund (IMF) has opened a special account to provide donors with a secure vehicle to direct financial assistance to Ukraine.
The IMF previously estimated that the war could cause the Ukrainian economy to contract by 25% to 35%. This is why its Executive Board confirmed on Friday that, at the request of several IMF member countries, it had approved the establishment of an Administered Account for Ukraine.
"The account is available for use by any other members as well as intergovernmental agencies and organisations who wish to use it as a vehicle to provide financial assistance to Ukraine," an IMF statement read.
The IMF’s Executive Board has established an Administered Account for Ukraine, which is a secure way for donors to give the country bilateral financial assistance. Canada has proposed up to CAD $1 billion to be disbursed through the account. Read more: https://t.co/d4gdaIDEnS
— IMF (@IMFNews) April 8, 2022
The IMF explained that the account will help quickly channel donor resources in the form of grants and loans aimed at assisting Ukraine "to meet its balance of payments and budgetary needs and help stabilise its economy."
Previous loans and grants
The account will receive loans or grants from donors in reserve currencies or special drawing rights (SDR) - account units within the IMF that all member States have - and disburse them into Ukraine’s SDR account at the IMF.
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Canada already announced that it would lend Ukraine’s government up to a billion Canadian dollars (€730 million) through the new instrument, becoming the first country to use the Administered Account for Ukraine.
The creation of the account follows the announcement by the IMF to disperse of US$1.4 billion (around €1.28 billion) under the Rapid Financing Instrument (RFI) to help meet urgent financing needs and mitigate the economic impact of the war in Ukraine.
The Ukrainian government, for its part, has raised about €1.1 billion through the sale of war bonds. It has also received financial support from the European Union, World Bank and other sources.
