For the first time since the global financial crisis of 2008-2009, the International Monetary Fund is set to allocate $650 billion globally in “special drawing rights” for 190 member-nation countries, including Ukraine, whose share would be $2.7 billion.
The emergency measure is meant to help nations cope with the economic fallout of the coronavirus pandemic, which besides killing nearly 3 million people in the world, sank much of the world in recession in 2020 and raised costs for medical care.
The special drawing rights can be converted into money and spent how a nation wants. Ukraine can use it to bolster its cash reserves, pay down debt or finance the budget. The allocation of drawing rights is based on a nation’s financial stake in the IMF. Since the United States is the largest shareholder, it will receive the biggest amount of special drawing rights. Ukraine’s share amounts to 0.42 percent.
National Bank of Ukraine Governor Kyrylo Shevchenko on April 12 suggested that Ukraine would use the money to bolster its reserves, according to his April 12 statement on Facebook following a meeting with Director of the IMF’s European Department, Alfred Kammer, UNIAN news agency reported.
The money “will help to build up gold and foreign exchange reserves and improve, according to our preliminary estimates, the indicator of the IMF’s composite criterion for the adequacy of international reserves from the current 91% to about 98%,” UNIAN reported Shevchenko as writing.
Reuters, quoting IMF First Deputy Managing Director Geoffrey Okamoto, said “the goal would be to make that allocation some time this summer. I would hope it’s on the early side of the summer.”
Separately, the IMF and Ukraine agreed on June 9, 2020 to a conditional $5 billion, 18-month loan agreement. But Ukraine hasn’t received any money since an initial $2.1 billion installment because it has not met its conditions for the credit. Among the agreed-upon conditions are independence of the National Bank of Ukraine and anti-corruption agencies. Talks remain stalled following an IMF mission that left Kyiv on Feb. 12.
Ukraine’s international reserves stood at $27 billion on April 1, 5% lower than in March due to “large repayments of external and internal public debt, which were partially offset by foreign-exchange inflows to the government,” according to the central bank.
Ukraine’s economy is officially expected to be $150 billion in 2021, with a $50 billion national budget.
