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IMF chief: Ukraine's economy depends on continued aid

by Abbey Fenbert December 18, 2023 6:25 AM 1 min read
IMF Managing Director Kristalina Georgieva in London, May 23, 2023. (Leon Neal/Getty Images)
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Billions of dollars in financial assistance from the U.S. and EU is vital to Ukraine's economic recovery, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), told the Financial Times.

Georgieva said that Ukraine's economy could likely withstand a funding delay of "a couple of months," but a longer gap would put the nation's path to economic recovery at serious risk.

Her warning comes as both the U.S. and the EU have struggled to secure billion-dollar funding packages for Ukraine.

Republican lawmakers in the U.S. continue to block a $61.4 billion financial assistance bill for Ukraine, tying up the legislation in contentious border security negotiations that are likely to drag into next year.

The EU's efforts to provide $55 billion in aid to Ukraine have been obstructed by Hungarian Prime Minister Viktor Orban, who vetoed the assistance at talks in Brussels on Dec. 14.

The uncertainty over continued financial support to Ukraine could force Kyiv to take drastic measures to stay afloat.

According to the Financial Times, if the funding is delayed past February 2023, Kyiv would likely be forced to borrow money from the central bank, risking a huge spike in inflation and macroeconomic instability.

“What is important is not to prolong this period, because then it would put more pressure on Ukraine to adjust . . . right at the time when the country has turned towards better prospects for the economy,” Georgieva said.

The IMF released a $900 million tranche of financial assistance to Ukraine on Dec. 12 following a review by the body's Executive Board. The board reported that Ukraine's economy was resilient, and Georgieva praised the government for stabilizing the economy under the pressures of Russia's full-scale war.

“Work will continue in the US and Europe," Georgieva said, referring to the stalled aid packages.

"Ultimately, I remain optimistic they will secure the funding.”

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