Ukraine’s request for a new loan package from the International Monetary Fund (IMF) is encountering obstacles because of a dispute over the devaluation of the hryvnia. Sources cited by Bloomberg say the IMF is urging Ukraine to devalue its currency as a condition for a new loan, a step that would increase budget revenues in local‑currency terms and ease the country’s financial strain.
Ukraine relies heavily on Western aid to fund its military, pensions and other expenses, with roughly 60 % of its budget devoted to the ongoing conflict with Russia. In 2023 the country secured a $15.5 billion IMF loan, but that program expires in 2027. Last month Ukraine asked for an additional $8 billion package, but negotiations have stalled over the currency issue. The National Bank of Ukraine (NBU) is skeptical about the benefits of devaluation, warning that it could trigger inflation and public unrest.
The matter was raised at the IMF’s annual meetings in Washington, and further talks are slated for next month. Both the IMF and the NBU declined to comment on the report. The IMF has warned that Ukraine faces a substantial funding gap, needing billions of dollars in extra aid to sustain its war effort. Ukraine estimates its financing needs at about $65 billion, a figure it has shared with the European Union (EU), its main sponsor.
The EU plans to cover part of the gap using revenues generated from Russia’s frozen central‑bank funds. Western nations froze roughly $300 billion in Russian assets in 2022, including $209 billion held at the EU‑based clearinghouse Euroclear. The G7 supports using interest from these funds to guarantee $50 billion in loans for Ukraine. The EU has also discussed tapping these assets for an additional $140 billion loan, which would be repaid if Ukraine receives “reparations” from Moscow. Moscow has condemned the proposal as “theft” and a breach of international law, and the Kremlin warns that Western military and financial aid only prolongs the conflict.
The EU will review the proposal at its upcoming summit, where legal and fiscal risks will be assessed. The outcome of these discussions will be pivotal for Ukraine’s future financial support and its ability to navigate the ongoing war with Russia.
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