Earlier this year, the IMF’s special envoy to Ukraine, Gavin Gray, reported that the country had made progress with reforms the organization deemed necessary. For example, Ukraine is working on improving public administration, fighting corruption and strengthening the rule of law
“In addition to the terrible humanitarian sacrifices, Russia’s invasion of Ukraine has had a devastating effect on the economy,” Gray said when announcing the agreement. For example, the Ukrainian economy will shrink by 30 percent in 2022 and more people will live in poverty since the Russian army invaded the country. Meanwhile, it is becoming increasingly difficult for the Ukrainian government to raise enough money for the enormous expenditure on the fight against the Russians, causing the budget deficit to rise sharply.
Customize your own rules
The billion-dollar aid should help stabilize public finances, reconstruction and economic recovery. In the long term, the money should also help with accession to the European Union. The IMF also expects Ukraine’s allies to provide additional financial aid thanks to the new package.
To be able to offer Ukraine such a large emergency package, the IMF had to adjust its own rules. Previously, it was not possible to come to the aid of countries facing extraordinary uncertainties, such as a war with a neighboring country. But earlier this month, the organization adjusted those rules in such a way that emergency loans are possible to countries that face major risks through no fault of their own.
