On Saturday, the International Monetary Fund said it anticipated to forward Ukraine’s request for $1.4 billion in emergency finance to its board for approval as soon as next week, and that it was in negotiations with officials in neighboring Moldova about funding options.
The global lender said in a statement that the war in Ukraine was already driving up energy and grain costs, had displaced over 1 million people to neighboring countries, and had triggered unprecedented sanctions against Russia.
The IMF said in a statement after a board meeting chaired by Managing Director Kristalina Georgieva that “although the situation is very fluid and the outlook is subject to unprecedented uncertainty, the economic effects are already very negative.”
“The protracted war and attendant sanctions will have a devastating impact on the global economy,” it predicted, saying that the situation was throwing inflation and economic activity into disarray at a time when price pressures were already strong.
It stated that price shocks would be felt all around the world and that governments should provide financial assistance to poor households whose food and fuel costs accounted for a higher part of their spending, noting that the economic harm would be exacerbated if the war escalated.
Sanctions on Russia imposed by the US, European countries, and others would have “a huge impact on the global economy and financial markets, with significant spillovers to other countries,” according to the report.
THE INFLUENCE ON UKRAINE AND MOLDOVA
Aside from the human toll, Ukraine was suffering significant economic losses, with seaports and airports stopped or damaged, as well as several highways and bridges damaged or destroyed.
“While it is difficult to estimate funding needs precisely at this time,” it stated, “it is evident that Ukraine will face considerable recovery and reconstruction expenditures.”
Ukraine’s request for $1.4 billion in emergency funding was anticipated to be considered by the board as early as next week. According to the IMF, Ukraine has $2.2 billion available under an existing stand-by arrangement until June.
According to the IMF, Moldova and other countries with significant economic ties to Ukraine and Russia are “particularly vulnerable” to scarcity and supply interruptions.
Moldova has requested an augmentation and re-phasing of its existing $558 million IMF loan program to help address the costs of the present crisis, according to the IMF.
