Ukraine looks to have become the latest country seeking to tap funds from the IMF’s emergency financing facilities to help countries deal with the coronavirus pandemic that was announced earlier this month, according to local media yesterday citing the NBU governor.
The Fund announced on 4 March that it had set aside US$50bn for emerging markets and developing countries through its existing rapid-disbursing emergency facilities, with US$40bn for emerging markets (such as Ukraine) available through its Rapid Financing Initiative (RFI) and US$10bn for low income countries through its Rapid Credit Facility (RCF).
There was, however, no mention of how much Ukraine will request. If Ukraine seeks 100% of quota, the normal maximum allowable under these facilities, that would amount to US$2.7bn we think. Of course, every little helps, as market financing dries up, but – as with most countries in these uncertain times – is it enough? According to reports, the central bank has spent US$1.7bn supporting the hryvnia, which has fallen by 11.5% against the US dollar since the end of February. Reserves stood at US$27bn at end-February.
Note, however, that this isn’t the IMF programme we’ve long been waiting for, after staff-level agreement on a new Extended Fund Facility (EFF) was announced in December. Discussions on that new programme continue, notwithstanding the interruption caused by President Zelensky's government reshuffle on 3 March and what that signalled about the reform agenda. One might imagine that Ukraine would be incentivised to try to reach agreement on the new programme sooner than later under current circumstances.
Ukraine joins Ghana, Iran and Venezuela in seeking help from the IMF's emergency financing facilities to fight coronavirus, as far as we know so far. According to reports on 17 March, Venezuela's disputed president Nicolas Maduro requested US$5bn from the IMF, although the request was rejected because there is no agreement within the IMF's membership over who it recognises as the country's legitimate president – Maduro or US-backed Juan Guaido.