Billions of dollars in financial aid from the US and EU are crucial to Ukraine's economic recovery, says Kristalina Georgieva, managing director of the International Monetary Fund (IMF). told the Financial Times.
Georgieva said Ukraine's economy could probably cope with a funding delay of “a few months,” but a longer delay would seriously jeopardize the country's path to economic recovery.
Her warning comes as both the US and EU struggle to secure multi-billion dollar financing packages for Ukraine.
Republican lawmakers in the US continue to do so block a $61.4 billion financial aid bill for Ukraine, stalling legislation in contentious border security negotiations that are likely to drag into next year.
The EU's efforts to provide $55 billion in aid to Ukraine have been stymied by Hungarian Prime Minister Viktor Orban vetoed support for talks in Brussels on December 14th.
Uncertainty about continued financial support for Ukraine could force Kiev to take drastic measures to stay afloat.
If funding is delayed beyond February 2023, Kyiv would likely be forced to borrow money from the central bank, risking a huge rise in inflation and macroeconomic instability, according to the Financial Times.
“It is important not to extend this period, because then this would increase the pressure on Ukraine to adapt.” . “Especially at a time when the country has turned to better prospects for the economy,” Georgieva said.
The IMF Approved on December 12 a $900 million tranche of financial assistance to Ukraine following a review by the body's board. The board reported that Ukraine's economy was resilient, and Georgieva praised the government for stabilizing the economy under pressure from the all-out war against Russia.
“Work in the USA and Europe will continue,” said Georgieva, referring to the stalled aid packages.
“Ultimately, I remain optimistic that they will secure funding.”
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