The International Monetary Fund said on Saturday it expects to submit Ukraine’s request for $1.4 billion in emergency funding to its board for approval as soon as next week and is in talks with authorities in neighboring Moldova about funding options.
In a statement, the global lender said the war in Ukraine had already pushed up energy and grain prices and sent a wave of more than 1 million refugees to neighboring countries, while unleashing unprecedented sanctions against Russia.
“While the situation remains very volatile and the outlook extremely uncertain, the economic fallout is already very serious,” the IMF said in a statement after a board meeting chaired by Managing Director Kristalina Georgieva.
“The ongoing war and associated sanctions will also have a serious impact on the global economy,” she warned, noting that the crisis negatively impacted inflation and economic activity at a time when price pressures were already high.
Price shocks would be felt around the world and the authorities should provide fiscal support to poor households, for which food and fuel accounted for a higher share of spending, adding that the economic damage would increase if the war escalated.
Widespread sanctions imposed on Russia by the United States, European countries and others would also have “a significant impact on the global economy and financial markets, with significant implications for other countries.”
Impact on Ukraine, Moldova
In addition to casualties, Ukraine suffered significant economic damage as seaports and airports were closed and damaged, and many roads and bridges were damaged or destroyed.
“While it is very difficult to accurately assess funding needs at this stage, it is already clear that Ukraine faces significant recovery and reconstruction costs,” it said.
The board was due to review Ukraine’s request for $1.4 billion in emergency funding as early as next week. Ukraine also has $2.2 billion available through June under an existing stand-by arrangement, the IMF said last week.
Moldova and other countries with close economic ties to Ukraine and Russia are at “particular risk” of shortages and supply disruptions, the IMF said.
It said IMF staff were actively discussing financing options with Moldova, which has requested an increase and rebalancing of its existing $558 million IMF lending program to help defray the costs of the current crisis.