By Andrea Shalal
KYIV, Jan 15 (Reuters) – International Monetary Fund chief Kristalina Georgieva arrived in frosty, snow-covered Kyiv early on Thursday for high-level talks as Ukraine prepared to mark the fourth anniversary of Russia’s full-scale invasion on February 24.
Central bank chief Andriy Pyshnyi greeted Georgieva in front of St Michael’s Golden-Domed Monastery in a square in central Kyiv, where burnt-out Russian tanks were displayed. Together, they placed flowers at a memorial wall bearing portraits of thousands of Ukrainian soldiers killed while fighting Russia.
The IMF managing director will meet with Ukrainian President Volodymyr Zelenskiy, Prime Minister Yulia Svyrydenko, other Ukrainian officials and business executives during her one-day visit, IMF officials said.
Georgieva’s visit to Ukraine was kept secret until her arrival in Kyiv due to security concerns.
IMF’S GEORGIEVA LAST VISITED UKRAINE IN 2023
The IMF chief, who has close family ties to Ukraine, last visited the country in February 2023. Her brother was in Kharkiv, the second-largest city, when Russia invaded.
Her visit comes a day after Zelenskiy declared a state of emergency in the energy sector to accelerate work on power supplies disrupted by Russian attacks on infrastructure. Repairs to thousands of apartment blocks have been complicated by frigid weather, with night-time temperatures dipping close to -20 Celsius (minus 4 Fahrenheit).
Ukraine and the IMF reached a preliminary agreement on an $8.2 billion, four-year lending program in November, contingent on passage of a budget and shoring up donor financing assurances, among other factors. IMF officials expect board consideration in several weeks.
Approval of the funding is critical, since it will unlock additional external investments needed to close Ukraine’s financing gaps, which the IMF has calculated at around $136.5 billion for the period through 2029, given the war.
ONGOING WAR HAS HIT UKRAINIAN ECONOMY HARD
The war, soon to enter a fourth year, has hit the Ukrainian economy hard, with the country slated to spend the bulk of state revenues – 2.8 trillion hryvnias or around 27.2% of GDP – to fund defense efforts in 2026.
Georgieva will review Ukraine’s progress on several actions, including passage of a 2026 budget, broadening the tax base to boost revenue, and ensuring large-scale external donor financing on grant-like terms.
When it announced the preliminary deal, the IMF said Ukrainian authorities also agreed to accelerate efforts to prevent tax evasion and avoidance.
The IMF expects Ukraine to introduce some of these measures in parliament, but isn’t counting on higher revenues until 2027.
In addition to working to “de-shadow” the economy, which has a high level of informal businesses that lack balance sheets, Ukraine also vowed to keep anti-corruption institutions independent, and fix loopholes in the current labor code.
EU TWO-YEAR LOAN TO HELP NARROW FUNDING GAPS
Ukraine passed a big milestone toward closing financing gaps last month when European Union leaders agreed to lend it 90 billion euros ($105 billion) for two years. Ukraine must only service the loan if Russia pays reparations after the war ends, which means it won’t pose a burden on the budget.
It also completed restructuring of $2.6 billion in growth-linked debt, easing pressure on Kyiv, which had warned that the instruments could have cost as much as $20 billion through 2041.
The new IMF program will replace its current four-year $15.5 billion program, of which some $10.6 billion has been disbursed, which had assumed the war would end in 2025.
The new preliminary agreement assumes the war will end this year, but includes a “downside scenario” that the war winds down slowly and does not end until 2028.
(Reporting by Andrea Shalal; Editing by Andrea Ricci and Bernadette Baum)
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