The International Monetary Fund transferred $2.7 billion to the account of the National Bank of Ukraine on Aug. 23, the eve of the country’s 30th Independence Day, in support of its economy affected by COVID-19.
“This is a great present for Ukraine’s Independence Day! Glory to Ukraine!” Kateryna Rozhkova, first deputy governor of NBU, wrote on Facebook, announcing the installment.
On Aug. 2, the IMF approved the decision to distribute $650 billion of Special Drawing Rights (SDR) monetary reserves to member countries by the end of the summer. Ukraine was to get its portion of $2.7 billion.
This is an unconditional loan contrary to the money Ukraine receives under the current $5 billion stand-by agreement with the IMF which requires Ukraine to conduct reforms in exchange for cheap loans.
The stand-by agreement expires in December. Ukraine authorities hope to get another tranche by then on top of the $2.1 billion already received within the agreement.
Read more: IMF praises Ukraine for reforms, agrees to visit in September
SDR allocation is not money in the classic sense — Ukraine cannot immediately spend it. It is savings in a country’s international reserves kept in foreign currencies — the U.S. dollar, the UK pound, euro, yuan, and yen.
For using the funds, Ukraine would need to exchange its SDRs into hard currencies with the other IMF members. SDR reserves are designed for use in times of crisis.
Among other countries set to receive SDRs from the IMF is the U.S. ($112.6 billion), Canada ($14.9 billion), and Australia ($8.9 billion).
There are, however, some controversial recipients in the list like China ($41.3 billion), Iran ($4.8 billion), Russia ($17.5 billion), and Belarus ($930 million), which are to get the assets from the IMF despite criticism from the U.S., the IMF’s largest shareholder.
The U.S. called on the IMF to cut off Belarus, ruled by dictator Alexander Lukashenko, from SDR assets. The U.S. is among Western countries that imposed sanctions on the Belarus government over the brutal crackdown on protests that had broken in the country following the fraudulent presidential elections in August 2020.
