IMF, Ukraine reach agreement on $400m loan program review

The International Monetary Fund and Ukraine reached an agreement Friday on a loan program review that will unlock around $400 million in much-needed funds more than three years after Russia's invasion.

The deal was announced during Ukrainian President Volodymyr Zelensky's trip to meet Donald Trump in Washington, which was marred by an extraordinary shouting match between the two leaders in the Oval Office that left efforts to end the war with Russia hanging in the balance.

The IMF said its staff had recently completed a nine-day visit to Ukraine, and were happy with the reforms the country had made under a four-year loan program struck last year worth around $15.5 billion.

The program "continues to provide a strong anchor for the authorities' economic program in times of exceptionally high uncertainty," IMF Ukraine mission chief Gavin Gray said in a statement.

Program performance "remains strong" and "all quantitative performance criteria" had been met up until mid-December, he continued, adding that the IMF's board should meet to consider the review "in the coming weeks."

Board approval - which is largely a formality - would allow for the immediate disbursal to Ukraine of around $400 million, bringing the total provided to the country under the program to more than $10 billion, according to the IMF.

Ukraine's economy "has continued to show resilience despite the challenges arising from three years of war," Gray said.

But, he warned, the IMF expects growth to moderate this year, "reflecting headwinds from labor constraints, damage to energy infrastructure, and the persistence of Russia's war in Ukraine."

The IMF also flagged concerns about Ukraine's inflation rate, which hit 12.9 percent in the year to January, due largely to rising food and labor costs.

"Given the risks from rising inflation, the recent increases in the policy rate by the NBU (National Bank of Ukraine) are appropriate," Gray said.

"Further action would be warranted if inflation accelerates further or inflation expectations deteriorate," he added.