IMF may cancel aid to Ukraine if Belgium does not agree to support reparations loan - media
European officials are concerned that the IMF could cancel aid if Belgium does not agree to back a EUR 140 billion reparations loan to Ukraine, Politico reports.
"Belgium’s refusal to back a multibillion-euro EU loan to Ukraine could prompt the International Monetary Fund to block financial support for Kyiv — resulting in a cascading loss of confidence in the war-torn country's economic viability, EU officials warn," the article says
Ukraine is facing a huge budget deficit and desperately needs IMF funding to continue defending itself against a full-scale Russian invasion. The IMF is considering providing Kyiv with an $8 billion loan over the next three years.
But hopes for IMF financial support depend on whether the EU can complete its own 140 billion euro loan to Ukraine, using frozen Russian state assets, most of which are held in Belgium.
A European Commission official and diplomats from three member states said that such a deal would convince the IMF of Ukraine’s financial capacity for the coming years, a requirement for the Washington institution to finance any country. However, Belgium opposed the loan at a meeting of EU leaders last month over financial and legal concerns, dampening hopes of finalizing the deal before a crucial IMF meeting, likely in December.
"We face a time frame problem," the EU official said. He pointed to the fact that the next EU leaders’ meeting is scheduled only for December 18-19, underscoring the need for more urgent decisions.
As the US significantly reduces support for Ukraine, the IMF expects the EU to bear the brunt of its financing needs in the coming years.
Although the size of the IMF program for Ukraine is relatively small, its approval signals to investors that the country is financially viable and on track with its reforms.
"It’s a benchmark for other countries and institutions to evaluate whether Ukraine is doing proper governance," said a Ukrainian official.
IMF experts will visit Kyiv in November to discuss the program for the next three years.,” the Ukrainian official said. IMF experts will visit Kyiv in November to discuss the program for the next three years.