Ukraine is counting on a new aid fund from the IDA for $2 billion and interest rate compensation – Ministry of Finance
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The International Development Association – IDA (International Development Association) is expanding the support package for Ukraine and creating a separate fund – SPURR (Special Program for Ukraine’s Recovery and Crisis Response), a feature of which will be the ability to multiply the funds attracted to it, thanks to which Ukraine can potentially receive $6 billion in aid . This was announced by Finance Minister Serhiy Marchenko, Interfax-Ukraine reports.
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“In the near future, it (the fund, — ed.) will be announced, its name is SPURR and the total amount is $2 billion. This fund is multiplicative: conditionally speaking, there is triple multiplication, that is, if they collect $2 billion, then potentially Ukraine can receive $6 billion in aid,” Marchenko said.
The head of the Ministry of Finance clarified that these are credit funds of the World Bank, and emphasized that the multiplier effect is very important.
He also reported that the issue of compensation of interest rates on soft loans provided to Ukraine, including for reconstruction, is being discussed.
“It is important that this new money does not affect our debt service obligations. This is also important for the program with the IMF, to observe debt sustainability. Therefore, we ask our partners to compensate the interest rate if credit funds are provided through the World Bank,” the minister explained.
Read also: France is ready to provide financial aid to Ukraine in the amount of 2 billion euros – Shmyhal
According to him, the URTF (Ukraine Relief, Recovery, Reconstruction and Reform Trust Fund), which was previously created by the World Bank, can be used as such.
“We show what tools are already ready: URTF — for grant funds, SPURR — for credit funds, but with the use of a multiplier effect. The URTF fund can be used as a compensator for interest rates in SPURR. This is how we see their combination,” Marchenko described the proposals that Ukraine is discussing with potential donors to restore the country.
The Minister reminded that the credit rate compensation mechanism is already in effect for the macro-financial assistance of the European Union for 18 billion euros per hour.
Source: Ministry of Finance
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