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IMF $15.6 billion loan to Ukraine.

 The International Monetary Fund(IMF) said on Friday its executive board approved a four year $15.6 billion loan program for Ukraine, which is part of a global $115 billion package to support the country's economy as it battles Russia's 13-month old invasion. If approved, it will be the first time in 80 years the IMF loans to country at war. This move is obviously politically motivated. Buy also, the

 humanitarian need on the ground is quite severe. The loan itself is actually for 2 1/2 years, but will unfold in two stages. The first is a year to year and a half will be devoted to building, fiscal, external, price and financial stability. Basically, they'll focus on something called revenue mobilization. Before that Ukraine must meet certain conditions over the next two years, including steps to boost tax revenue, maintain exchange rate stability, preserve central bank independence and strengthen anti-corruption efforts, because some news has been coming out of Ukraine about corruption of money coming in. All these tools for the first batch is also to help Ukraine into EU, which is one of the major goals. The second phase of the deal, which can last up to the four-year mark, is really designed to entrench macroeconomic stability, support recovery and early reconstruction program while Kyiv, again, tries to achieve the main goal, and that is EU accession. As Ukraine is currently in war, so they cannot increase taxes or anything, so the package is to help keep the government in place, with the eventual goal of, when things go back to normal, after the war , they will anchor their policies in sustainable financial policies and have a gradual economic recovery and promote long-term growth. Before the war Ukraine is the third largest borrower from IMF. By this package the IMF is sending a signal that they support the Ukrainian government and also is expected to mobilize large-scale financing from other international donors and partners, like the one we just recently had last February when Secretary Yellen made a surprise visit to Ukraine- added another $1.2 billion to an already $30 billion gift from the US. And that's not counting the military aid, which is about 47 billion just from the United States alone. This decision clears the way for an immediate disbursement of about $2.7 billion to Kyiv. The $115 billion package includes the IMF loan, $80 billion in pledges for grants and concessional loans from multilateral institutions and other countries, and $20 billion worth of debt relief commitments. IMF first Deputy Managing Director Gita Gopinath said Russia's invasion of Ukraine continues to have a devastating economic and social impact and lauded Ukrainian authorities for maintaining "overall macroeconomic and financial stability" despite the strains of war. This loan package has also attract

 controversies as there are many nations that are at war but, IMF has never approved any loan for them. This due to that as the United States is the largest shareholder at 16.5% and everybody else is 6% something or lower. So, there is definitely political pressure, especially from US and the EU to make this work and continue to work.   


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