IMF welcomes EU's 90 billion euro loan to Ukraine, more work to be done

The International Monetary Fund welcomed on Friday, December 19,  that European Union leaders agreed to lend 90 billion euros ($105 billion) to Ukraine, a spokesperson said.

"This is an important milestone towards closing financing gaps and restoring debt sustainability," said the IMF in an emailed response.

EU leaders decided earlier on Friday, December 19, to borrow cash to lend Ukraine 90 billion euros for the next two years - rather than use frozen Russian assets.

The funding is critical for Ukraine, which has been heavily reliant on donor cash since Russia's full-scale invasion in 2022 upended its economy.

European financial support is a key element of the IMF's assessment of Ukraine's debt as sustainable - a requirement for most lending programmes.

Ukraine and the IMF struck a preliminary agreement on a new, $8.1 billion lending programme in late November that still needs approval from the fund's Executive Board.

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Prior actions needed for the board to consider the new program include the adoption of a program-consistent budget for next year, broadening the tax base, and promoting anti-corruption reforms, among others. Getting financing assurances from donors is also required. No date has been set for a board meeting on Ukraine.

The Fund has estimated that Ukraine will need about 135 billion euros ($158.57 billion) for 2026 and 2027. The interest-free EU loan should cover about two-thirds of Ukraine's needs for the next two years.

"We are continuing to work with international donors to secure the necessary financing assurances," the IMF said.

Underscoring the imbalance, Ukraine's Finance Minister Sergii Marchenko told G7 leaders on Friday that it is necessary to continue work on implementing a Reparations Loan.

The war itself continues to sap Kyiv's financial resources, and the country plans to spend the bulk of state revenues - 2.8 trillion hryvnias or around 27.2% of GDP - to fund its defence efforts in 2026.

IMF spokesperson Julie Kozack said in a news briefing on December 4 that "on the question on the Russian assets, what I can say is that we do welcome the rigorous discussions in Europe to support Ukraine, and the goal to do so in a manner that is consistent with restoring Ukraine's debt sustainability."