Ukraine has accessed nearly all — with the exception of $80 million — of the $2.7 billion in new International Monetary Fund emergency reserves it received in August, IMF data show, and experts say the country is likely to need urgent debt relief this year.
Ukrainian forces are fighting Russian troops who invaded the country last week in the biggest attack on a European state since 1945, which has left thousands dead or injured and led to the flight of more than 1 million refugees.
Western nations are sending billions of dollars in financial support and weapons to help Ukraine while imposing sweeping sanctions designed to pressure Russia to stop the attack.
The World Bank’s board is expected on Friday to approve $350 million in initial budget support funds as part of a broader $3 billion package, while the IMF expects to approve the disbursement of much of the $2.2 billion. billion remaining in a stand-by deal with Ukraine next week.
Reuters reported last month that Ukraine is working with the United States and other Western nations to develop a new tool that would allow wealthier countries to transfer their special drawing rights (SDRs) from the IMF to Kiev.
Further complicating the crisis is Ukraine’s heavy debt burden, which totaled $94.7 billion at the end of 2021, including loans from multilateral institutions such as the IMF and bilateral, private and domestic creditors.
But the US Treasury Department and the IMF can take several steps to alleviate Ukraine’s debt and avoid a payments crisis, Eric LeCompte, executive director of the Jubilee USA Network, told Reuters.
The Treasury could seek congressional authorization to freeze the $2 million in payments Ukraine owes the United States this year as part of its $790 million bilateral debt, he said.
US President Joe Biden could also issue an executive order delaying payment of debts to private creditors located in the United States, he said, citing a similar step taken by former President George W. Bush during the Iraq war in 2004-2005.
Ukrainian dollar-denominated bonds, which were issued as part of a 2015 debt restructuring, are trading in deeply stressed territory of around 25 cents on the dollar.
Source: CNN Brasil
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