The IMF will immediately release $1.5 billion from the package, providing a lifeline as Kyiv’s funds are expected to run out by April amid years of conflict with Russian forces, according to a report
Ukraine’s financially strained government got a brief relief early Friday as the International Monetary Fund approved a new $8.1 billion loan.
According to a Politico report, the IMF will immediately release $1.5 billion from the package, providing a lifeline as Kyiv’s funds are expected to run out by April amid years of conflict with Russian forces.
“It is very important for us that in the fifth year of a full-scale war, against the backdrop of systemic attacks on the energy sector, Ukraine has guaranteed international financial support from partners and a resource for the stable operation of the state,” Ukrainian Prime Minister Yulia Svyrydenko posted on Facebook after the IMF’s announcement.
The IMF initially sought stronger assurances on Kyiv’s financial stability before approving the loan, coming after most EU countries agreed last year to raise €90 billion in joint debt to support Ukraine.
However, the IMF funds offer only a small cushion. Ukraine’s budget deficit is expected to exceed $50 billion this year, heightening pressure on the EU to resolve a dispute with Hungary blocking critical financial aid.
The €90 billion EU package could fill the gap, but Hungary is withholding approval, alleging Ukraine is deliberately delaying repairs to the 4,000-kilometer Druzhba pipeline that supplies Russian oil.
Ukraine has denied the claims, and the European Commission says Hungary has enough reserves to avoid an immediate energy crunch.
Brussels is scrambling to resolve the dispute without fueling Hungarian Prime Minister Viktor Orban’s anti-EU campaign ahead of April’s national election.
Orban has also stoked anti-Ukraine sentiment, with his party Fidesz trailing the opposition Tisza by a wide margin. A defeat would end his 16-year rule.
Some EU diplomats feared Orban’s veto could delay the IMF loan. The lender had demanded stronger assurances on Kyiv’s financial health after four years of war doubled Ukraine’s debt to 108.7% of GDP.
Mid-December, 24 EU leaders agreed to raise €90 billion in joint debt to support Ukraine’s defence. Kyiv will only repay once Moscow ends the war and pays reparations — an unlikely scenario. If Russia refuses, the EU could reclaim funds from frozen Russian assets.
Orban’s veto remains pivotal. Recent talks with European Council President António Costa suggest he may lift it if the EU assesses Druzhba pipeline damage.
Some diplomats say he could also relent if Brussels approves a €16 billion defence loan for Hungary. EU lawyers are reviewing treaties for potential loopholes to bypass the veto — but Kyiv doesn’t have time to wait, reported Politico.
“Ukraine and its people have weathered a long and devastating war for over four years with remarkable resilience,” Politico quoted IMF Managing Director Kristalina Georgieva as saying.
“Nevertheless, the war has taken a toll on economic and social conditions, with slowing growth and the outlook remaining subject to exceptionally high uncertainty,” Georgieva added.
With inputs from agencies
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