What can Ukraine expect from the IMF and World Bank meetings in Washington?

The meetings of the International Monetary Fund and the World Bank began in Washington. The heads of the world’s central banks and finance ministers are gathering in the American capital this week to discuss, during discussions, bilateral meetings and expert seminars, the prospects for the world economy, the stability of the financial system against the backdrop of the recent collapse of banks in the United States and Europe, limiting the economic influence of Russia’s war in Ukraine, the struggle circumventing sanctions from Russia, etc.

The head of the National Bank of Ukraine Andrii Pyshnyi, as well as the deputy head of the National Bank of Ukraine Serhii Nikolaychuk, have arrived in Washington, the institution reported on Facebook. President of Ukraine Volodymyr Zelenskyi plans to address the meeting via video link on Wednesday.

Among the issues on which Ukrainian officials seek to make progress in Washington: implementation of the IMF program, overcoming the consequences of Russian military aggression and increasing sanctions pressure on Russia, ensuring Ukraine’s economic stability and recovery. Planned meetings with the management of the IMF, the World Bank, the EBRD, the US Treasury Department, the European Central Bank, and heads of European central banks, the NBU reported.

Russia’s war in Ukraine has exacerbated the problems facing the world – from rising food prices to increasing geopolitical tension, the Fund’s Managing Director Kristalina Georgieva said at the opening of the meeting.

“One of these shocks is that the senseless war in Ukraine can disappear simply if one country that invaded Ukraine simply decides to stop the war,” says the official. “Why is this important for what we are discussing here today? First of all, this war distracts the world from many pressing problems. This war not only kills people, it drives up food prices and it increases geopolitical tensions, reduces the world’s ability to work together. So there is a problem that this meeting cannot solve, but it a resolution would greatly help to resolve the issues we are discussing.”

A week ago, the IMF approved a large-scale aid package for Ukraine in the amount of 15.6 billion dollars, of which 2.7 billion are already in Ukraine. The funds helped to curb economic stability and finance the main budget expenditures, the Ministry of Finance of Ukraine said. The National Bank hopes to receive a total of $5 billion from the IMF this year.

However, the program, which is unprecedented for a country at war, carries “significant risks” to its implementation, as stated by Deputy Director of the IMF Gita Gopinat, and provides for 19 different measures to stabilize the economy on the part of Ukraine by the end of the year, including measures to increase tax revenues, stability of the currency exchange rate, anti-corruption and stability of the central bank. Quarterly reviews have also been provided since June. The program was a confirmation that the international community supports Ukraine in the long term, the US Treasury stated.

If the war ends by mid-2024, Ukraine’s need for foreign financing will amount to $115 billion. IMF official Gavin Gray shared these assessments with journalists. However, if the war continues until the end of 2025, the need will increase to 140 billion dollars.

But the cost of post-war reconstruction will require significantly more resources from donors. Before the meeting, the World Bank increased the estimate of costs for the reconstruction of Ukraine to 411 billion dollars from 349 billion announced before that.

Fighting to circumvent Western sanctions imposed to limit Russia’s ability to finance the war is also on the agenda. This was reported to the press by representatives of the US Treasury Department. Despite the sanctions, Russia is trying to reorient trade routes and buy what it needs, particularly for the war against Ukraine, through neighboring countries or more lenient jurisdictions, such as the United Arab Emirates or Turkey, CNN reports.

Among initiatives to tackle sanctions evasion, last month at the Summit for Democracy, the US and more than 20 other countries agreed to take steps to increase transparency in the ownership structure of corporations to prevent the use of the Western financial system for money laundering. Janet Yellen, the US Treasury secretary, welcomed the measures as well as the decision of the International Anti-Money Laundering Group (FATF) last month to exclude Russia from its membership. “Russia continues to disrespect sovereignty, commit inhumane acts against Ukraine and act as a haven for illegal funds,” the official said.

The Kremlin’s kleptocratic regime unleashed the war in Ukraine, an official says: “Corruption allowed Vladimir Putin and Russian oligarchs to embezzle their country’s wealth to finance an illegal war against Ukrainian civilians.” Yellen recalled that during a visit to Kyiv last month, she “was able to see firsthand the tragic impact of Russia’s barbaric attacks.”

The IMF and international financial organizations also supported measures to reduce Ukraine’s debt burden.