United Kingdom Ukraine, the first country at war to receive IMF aid

For the first time in its 76 years of existence, the International Monetary Fund (IMF) has lent money to a country at war: Ukraine

United Kingdom Ukraine, the first country at war to receive IMF aid

For the first time in its 76 years of existence, the International Monetary Fund (IMF) has lent money to a country at war: Ukraine. The institution has had to change its policy for granting aid in relation to "situations of exceptionally high uncertainty, involving exogenous shocks [that is, unrelated to the affected economy], which are beyond the control of the country's authorities and the scope of their economic policies, and that generate larger-than-usual exceptional financial risks. It is a very long way, which in English needs 32 words, to say the same as in three: "in case of war".

The Executive Committee, which is the Fund's highest management body, approved the change in aid criteria on Friday. On Tuesday, the institution announced the delivery of 15.6 billion dollars (14.475 billion euros) to Ukraine. It is a credit that is equivalent to approximately 11% of the current Ukrainian GDP, since the economy of that country sank by 30% in 2022 as a result of the war, going from 200,000 million dollars (186,000 million euros) to 140,000 million dollars.

Although the figure is considerable, it is still far from the generosity shown by the Fund with Argentina, to which it has come to grant credits worth up to 20% of its GDP. Despite the well-proven ability of the South American country to suspend payments on a regular basis, fall into hyperinflation, falsify its statistics, and carry out uncontrolled devaluations.

The great symbolism in this case is the fact that Ukraine is a country in an active military conflict with another country - Russia - a category of nations to which the IMF has evaded lending to date. The measure must still be approved by the Executive Committee, but it does not seem that it will be a problem. The definitive 'green light' could thus come at a moment of high symbolism, in which the eyes of the financial community turn to the Fund: its Spring Assembly, which is held in April.

The institution foresees a stagnation of the Ukrainian economy or perhaps a slight increase this year, although everything is subject to enormous uncertainty. In the case of Russia, the Fund believes that GDP fell by 2.2% last year and will grow by 0.3% in 2023. These figures have been disputed by numerous independent experts, who believe that the Fono is simply accepting official Russian statistics, intended to reinforce the impression that international sanctions have had no impact on its economy.

The Kremlin has inexplicably published macroeconomic magnitudes, such as when it first released annual GDP growth in January and, days later, that of the fourth quarter. It is something that does not make sense, given that to calculate the growth of the economy in a complete year it is necessary to first know how it was in the four quarters that make it up.

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