IMF chief says working on $40-48 billion financial support plan for Ukraine

Georgieva pointed out that the forces of fragmentation are pulling the world apart and its loss could amount to trillions of dollars for the world economy

by

Waheed Abbas

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Published: Tue 14 Feb 2023, 5:00 PM

The International Monetary Fund (IMF) is working on a programme along with its partner for Ukraine to provide external financial support of around $40 to $48 billion this year for the country to function, said Kristalina Georgieva, managing director, IMF.

The IMF has provided emergency finance to Ukraine totalling about $2.7 billion so far.

“The programme will be helped by the European Union, the US and others. We have to play our stabilizing role by being there for the Ukrainian economy and its people,” she said, adding that “a lot of folks globally are worried about the amount of money that is going to be poured into Ukraine and where it's going to end up.

“It is true that Ukraine had very serious problems with corruption and one of the reasons for the IMF to have consecutive problems with Ukraine was to work on creating the institutions that fight corruption and accountability mechanisms that reduce the probability of money being stolen,” the IMF chief said during a panel discussion at the World Government Summit in Dubai on Tuesday.

“The nation came together in a way that surprised us and it became actually easier to press for more attention to the standing of the Ukrainian nation and the embracement of a fight against corruption,” the IMF chief added.

Fragmentation challenge

During the panel discussion, she also pointed out that the forces of fragmentation are pulling the world apart and its loss could amount to trillions of dollars for the world economy.

“What we face is that forces of fragmentation are pulling us apart. The cost of this fragmentation is quite scary because it can cost the world anywhere between losing 0.2 to 7 per cent of GDP. It is wiping out Germany and Japan from the world economy,” said Kristalina Georgieva, managing director, International Monetary Fund (IMF), during a panel discussion on Tuesday.

Japan and German economies have an estimated total size of nearly $10 trillion.

“If we don't resist the forces of fragmentation and pave the way for pragmatic collaboration, we would be all poorer, and the world would be less safe,” she said in a stark warning.

She added that many countries are increasing defence spending after the Russia-Ukraine war because they say that they “cannot take peace for granted anymore” which means less money domestically for education, healthcare, infrastructure and support for the poor.

“I would scream from a top of a mountain, hey, wake up, we need each other. And therefore we have to figure out how we work together in a multi-polar world. We can do it.”

Abdulla Bin Touq Al Marri, Minister of Economy, UAE, said fragmentation and countries putting their national priorities ahead will take away three decades of seamless global trade. “This is one of the greatest challenges we are looking at at the moment.”

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