The International Monetary Fund (IMF) says it has approved a monitoring program for Ukraine that is "designed to help Ukraine maintain stability and catalyze donor financing" as it struggles to meet its financial needs amid Russia's invasion.
The Washington-based agency said in a statement late on December 19 that Moscow's war, which is now in its 300th day, has had "a devastating social and economic impact on Ukraine," resulting in a severe economic contraction, while inflation remains high, and public finances are under "extreme" pressure.
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“Notwithstanding all these strains, the authorities have largely managed to maintain macroeconomic and financial stability, and they are committed to continue adapting policies to fast changing circumstances, including in the case of a severe downside scenario," the IMF said.
“Against this background, management has approved the authorities’ request for Program Monitoring with Board Involvement (PMB). The PMB is tailored to Ukraine’s exceptional circumstances, to help the authorities implement prudent macroeconomic policies during this particularly difficult period and catalyze donor financing," it added.
Russia invaded Ukraine in late February, but its troops have been bogged down recently, with soldiers having been forced to make three major retreats. The fiercest fighting is currently in Donetsk, on the Bakhmut-Avdiyivka line in eastern Ukraine.
Russia has been using cruise missiles and Iranian-built drones to hammer Ukraine’s energy infrastructure nationwide as part of an apparent strategy to try to freeze Ukrainians and demoralize the population during the winter months.
Ukrainian officials have raced to repair damaged infrastructure and called for donations from the West, both for generators and power-grid equipment, but also for more advanced air-defense systems and funding to keep the country running.
The IMF said the program will focus on a targeted set of policy actions to support macroeconomic and financial stability, which will require enhancing revenue mobilization, containing monetary financing and therefore reviving domestic debt markets.
At the same time, the four-month PMB will try to promote transparency and preserve "hard-won" gains from past IMF-supported programs, including in the areas of independence of the National Bank of Ukraine, the IMF said.