Ukraine is optimistic that its new $8.2 billion IMF program will receive formal approval within a matter of weeks, according to the country’s debt chief. The agreement will replace an existing $15.6 billion facility and is designed to keep the economy stable and public spending on track amid a projected $140 billion budget shortfall over the next few years.
During an interview in London, the long‑serving head of Ukraine’s debt management said the IMF Board’s sign‑off should come very soon, with February still a realistic timeline. The IMF, however, declined to comment on the exact timing.
The war’s four‑year anniversary is fast approaching on February 24, and since the invasion Ukraine has relied on hundreds of billions of dollars in support from Western governments and institutions, as well as a sovereign debt restructuring that exceeded $20 billion.
While waiting for the new IMF program, Ukraine has already agreed on the fiscal numbers for this year and next. The debt chief noted that the country will cover the budget deficit using existing commitments, and praised a recent €90 billion loan from the European Union.
Discussions about a potential U.S. brokered ceasefire have not altered Ukraine’s stance. The country remains cautious, emphasizing that a ceasefire would not eliminate financial pressures. Even in a pause of hostilities, Ukraine believes it must maintain a strong and well‑armed force.
When the war ends, Ukraine is unlikely to rush into issuing additional international market debt. Instead, it will continue to rely on cheap concessional lending and local currency debt markets, which protect against currency risk.
The IMF program is underpinned by a debt stability analysis, limiting the government’s ability to issue sovereign guarantees for state‑owned firms such as the railways and the national gas company. While the government cannot provide guarantees, it can support these firms in developing long‑term business models.
Another key focus is the gradual removal of wartime capital controls. Allowing international investors to repatriate the principal they lend to Ukraine’s local currency bonds is seen as an important step toward expanding the local bond market—an effort that could begin before the war concludes.
Ukraine is also collaborating with Clearstream, owned by Deutsche Börse, to make its bond market more attractive and is pursuing integration into the European Central Bank’s TARGET2 system, which handles trillions of euros in daily payments. The government is looking for a strategic partner this year to accelerate this build‑out.
Reclaiming a place in emerging market indices, such as JPMorgan’s GBI‑EM local sovereign debt benchmark, is another objective. Ukraine had only one bond accepted into the index in March 2022, and the goal is to have its bonds index‑eligible and to establish the local market as a large, sustainable source of funding.
