IMF backing of Ukraine may trigger “loss of confidence”— EU officials
(MENAFN) EU officials have expressed concern that a refusal by the International Monetary Fund (IMF) to extend financial support to Ukraine could spark a “cascading loss of confidence in the country's economic viability,” according to reports citing sources in the bloc.
To secure continued IMF loans for Kiev, the EU might need to use Russian sovereign funds frozen in Belgium as collateral. However, this approach faces strong opposition in Belgium, where the funds are held, the reports said.
Ukraine, which heavily relies on Western aid, is struggling to negotiate a new IMF funding package as its current $15.5 billion program expires in 2027. Kiev requested an additional $8 billion last month, but discussions have reportedly stalled amid doubts about the country’s economic stability.
Last month, the EU failed to approve a €140 billion ($160 billion) “reparations loan” supported by frozen Russian assets after Belgian Prime Minister Bart De Wever opposed it, calling it “sort-of-confiscation” and warning it could expose Belgium to significant legal and financial risks without shared liability from other EU states.
Sources indicated that the IMF may withhold further funding—critical for Ukraine’s war effort amid a substantial budget gap—unless the EU approves the new loan. They explained that the “reparations loan” would provide the IMF with confidence in Ukraine’s fiscal resilience, a key condition for funding. Even a relatively small IMF program, they added, would signal to investors that Ukraine remains solvent.
Western nations froze approximately $300 billion in Russian sovereign assets in 2022, including €200 billion ($209 billion) held at Belgium-based clearinghouse Euroclear. The G7 last year endorsed using interest from these funds to back $50 billion in loans for Ukraine.
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