A CAD 450 million (equivalent to $350 million) concessional loan from Canada has been transferred to the state budget of Ukraine.
According to a press release from the Ministry of Finance on Thursday, the funds were provided through the mechanism of the Administrated Account of the International Monetary Fund (IMF). The amount of the loan from Canada is CAD 1.45 billion (equivalent – $1.2 billion). The repayment period is 10 years, the interest rate is 1.69% per annum.
Minister of Finance of Ukraine Serhiy Marchenko thanked the Government of Canada and Deputy Prime Minister, Minister of Finance of Canada Chrystia Freeland for their uncompromising support of Ukraine.
Ambassador of Ukraine to Canada Yulia Kovaliv said that the allocated funds will be used to purchase natural gas to support the heating season.
According to her, the total amount of financial assistance to Ukraine from Canada since the beginning of the war has reached CAD 1.95 billion.
For the second time in a year, the International Monetary Fund (IMF) worsened its forecast for global economic growth in 2022 – to 3.2% from 3.6% (4.4% growth was expected in January). For 2023, the estimate has been lowered to 2.9% from the 3.6% growth expected in April (in January, the IMF forecast global GDP growth of 3.8%).
Such an assessment is given in the World Economic Outlook Update: Gloomy and more uncertain, published by the IMF on Tuesday.
The IMF lowered the growth forecast for the economies of emerging market and developing countries for 2022 to 3.6% from 3.8%, for 2023 – to 3.9% from 4.4%.
The growth forecast for China’s economy this year has been significantly reduced to 3.3% from 4.4% (in January, an increase of 4.8% was expected), in 2023 to 4.6% from 5.1%.
India’s GDP growth estimate is also downgraded to 7.4% from 8.2% in 2022 and to 6.1% from 6.9% in 2023, respectively.
At the same time, the growth forecast for the Brazilian economy has been raised to 1.7% from 0.8% in 2022 and lowered to 0.9% from 1.4% in 2023.
The forecast for GDP growth in developed countries in 2022 is downgraded by 0.8 percentage points to 2.5% and by 1 p.p. – up to 1.4% – in 2023.
There is also a serious reduction in the forecast for US GDP growth: in 2022 – by 1.4 p.p. to 2.3%, in 2023 – by 1.3 p.p. up to 1%.
The economy of the eurozone countries this year, according to the IMF, will grow by 2.6%, which is 0.2 percentage points. less than the previous forecast. For 2023, the estimate deteriorated more significantly – an increase of 1.2% compared to the previously expected 2.3%.
The forecast for Italian GDP growth in 2022 was raised to 3% from 2.3%, in 2023, on the contrary, it was reduced to 0.7% from 1.7% (was 2.2%). The forecast for Spain for the current year is reduced by 0.8 percentage points. – up to 4% and by 1.3 p.p., up to 2% in 2023
The German economy in 2022 will grow, according to the IMF, only by 1.2%, previously expected to grow by 2.1%, in 2023 growth will slow down to 0.8% compared to the previous forecast of 2.7%.
For France, the assessment has been reduced for the current year by 0.6 percentage points. – up to 2.3% and by 0.4 p.p. for 2023 – up to 1%.
The UK economic growth forecast for 2022 is reduced by 0.5 p.p. – up to 3.2%, for 2023 – by 0.7 p.p. – up to 0.5%. Japan’s GDP is expected to grow by 1.7% in 2022-2023 (down 0.7 percentage points this year and 0.6 percentage points next).
The fund improved its assessment of the dynamics of the Russian economy in 2022, expecting it to fall by 6%, and not by 8.5%, as predicted in April. At the same time, the forecast for 2023 has worsened: according to the Fund, the decline in the RF GDP will be 3.5% compared to the previous forecast of 2.3%. In January, the Fund predicted the growth of the Russian economy in 2022 by 2.8%, in 2023 – by 2.1%.
The IMF states: the risks for the updated global forecast are overwhelmingly shifted to the downside. A war in Ukraine could lead to a sudden halt in gas imports from Russia to Europe; slowing down inflation may prove more difficult if labor market deficits exceed expectations or inflation expectations cannot be anchored; tightening conditions in the global financial market is fraught with debt crises in developing countries; new outbreaks of COVID-19 and lockdowns, coupled with further escalation of problems in the real estate sector, could further slow China’s growth; geopolitical fragmentation could hinder the development of world trade, the IMF lists risk factors. In an alternative forecast scenario in which these risks materialize, global GDP growth will slow down to 2.6% and 2% in 2022 and 2023. respectively.
Ukraine has applied to the International Monetary Fund (IMF) for support in covering the financial gap to keep the economy functioning in the amount of $5 billion per month for the next three months, and the IMF will assist in raising these funds, said Fund Managing Director Kristalina Georgieva .
“The first priority is to provide support to fill this financial gap in Ukraine over the next three months,” she said at a press conference in Washington on Wednesday.
“Let me emphasize that this $5 billion is for keeping the economy functioning, not for Ukraine’s recovery needs, which will be huge,” Georgieva added.
She noted that the Fund has worked very closely with the Ministry of Finance of Ukraine regarding these estimates provided by them and there is some uncertainty about this amount, but, according to the IMF, it does not go beyond the likely needs of the country.
“What we are doing is working with our partners to ensure that this kind of support is mobilized through various channels and further work on detailing specific needs and how those needs can best be met,” the IMF chief said.
Georgieva recalled that the Fund has created and will administer a special administrative account to send money from donor countries to help Ukraine. “We already have one contribution to this effect and others can contribute. We look forward to it,” added the Managing Director.
She noted that such large funding for Ukraine is important for obvious reasons: most of the economy is not working, the Fund predicts about a 35% decline in GDP this year. “And so filling this financial gap is best done by relying on grant funding, and this is what we want to see in order to raise funds for Ukraine in search of financial support,” said Georgieva.
According to her, the IMF is already discussing a follow-up program for Ukraine.
“Of course, we have very high uncertainty right now, but it should not prevent us from starting work on a support package for Ukraine in the future,” Georgieva stressed.
She clarified that this program, which the Fund can begin to structure for the future, will not be submitted to the board of directors while hostilities are still ongoing. “Because it is unfair to expect the Ukrainian authorities to develop a massive package of reforms. They are doing the right thing now, focusing on what matters most at the moment, namely keeping the economy functioning, and they are doing a really good job,” said the head of the IMF , expressing admiration for the work of the Ukrainian economic bloc consisting of the Ministry of Finance and the National Bank to maintain macroeconomic and financial stability in the country at war.
As reported, on March 9, the IMF approved Ukraine’s request for $1.4 billion in emergency financing under the Rapid Financing Facility (RFI) and transferred the money to the country the next day.
The International Monetary Fund (IMF) is considering providing $1.4 billion in emergency funding for Ukraine to help it respond to Russia’s invasion, IMF Managing Director Kristalina Georgieva announced on Tuesday.
“Today, we have sent to our Executive Board a proposal they will consider for approval tomorrow for $ 1.4 billion in support for Ukraine, to help it cope with the shock caused by this war,” the IMF said in a statement citing Georgieva.
She said that the IMF also disbursed $700 million to Ukraine in December and has provided a Special Drawing Rights allocation of $2.7 billion that was very handy to Ukraine at this moment.
Ukraine intends to prohibit former owners of failed banks from participating in public procurement and privatization until they take measures to pay off their debts to the Deposit Guarantee Fund, according to a memorandum signed between Ukraine and the International Monetary Fund (IMF).”We will specifically enumerate measures that can be taken to end the state’s business-as-usual with former owners of failed banks until the latter have taken actions to satisfy their debts to the Deposit Guarantee Fund, for example, by prohibiting former bank owners of resolved banks, their related parties, and entities controlled by them, with legally ascertained debts to the Deposit Guarantee Fund, from participating in public procurement and privatization processes,” the document said.According to it, Ukraine is stepping up its efforts to boost asset recovery from the former owners and related parties of failed banks to reduce the cost of bank failures to Ukrainian taxpayers.”We recognize the need to take a more comprehensive approach to pursue all commercial and legal avenues available to recover assets from failed banks and hold former owners and former managers of failed banks accountable for losses. This comprehensive approach would demonstrate a strong political commitment and provide a consolidated view on Ukraine’s asset recovery strategy, on policy measures that will fix institutional, legal and coordination gaps forestalling recoveries with due attention,” the memorandum said.In addition, it undertakes to ensure the impossibility of interfering with the work on the return of PrivatBank’s assets.The new structural benchmark is to prepare a comprehensive asset recovery strategy paper and action plan, which will be adopted and published by the Cabinet of Ministers by end-February 2022.
Ukraine, under the updated memorandum with the International Monetary Fund (IMF), has undertaken to complete and publish an audit of the remaining portion of the funds of the Fund to Fight against COVID-19 spent by Ukravtodor by late 2021.”Complete and publish the audit of the remaining portion of the funds spent out of the COVID-related spending program by end-December 2021,” according to the document released by the IMF on Wednesday.This condition is one of the structural benchmarks of the Stand-By Arrangement.It is clarified that all 100% of the funds allocated for the fight against COVID-19 will not be subject to audit, since the costs of a comprehensive audit in this area by far would outweigh the benefit.”We will complete the audit of the remaining portion of the funds spent out of this budget program – mostly spent by the state road fund [UAH 13.3 billion] – by end-December 2021,” the document said.”While confidentiality agreements with suppliers may not allow for public disclosure of details on some spending, we are currently exploring options to make this possible,” it said.According to the memorandum, following the audit of the COVID-related spending, law enforcement agencies are already considering 212 cases.
