IMF Approves $8.1B Loan to Support Ukraine War Effort

The International Monetary Fund (IMF) has approved a new $8.1 billion, four-year loan programme for Ukraine to support the country’s economy as the war with Russia enters its fifth year. The decision was taken by the IMF’s Executive Board on Thursday.

Under the new Extended Fund Facility (EFF), Ukraine will immediately receive $1.5 billion to help the government manage its budget and maintain essential public spending.

The IMF said the new programme will support a broader $136.5 billion international financial assistance package for Ukraine. This comes as the country marks four years since Russia’s full-scale invasion.

The new arrangement replaces a previous $15.5 billion programme approved in 2023. According to the IMF, the fresh loan will help Ukraine maintain economic stability, manage public finances, and continue key reforms.

Ukrainian Prime Minister Yulia Svyrydenko welcomed the decision, saying the loan forms part of a wider financial framework designed to cover an estimated $136.5 billion budget shortfall over the next four years. This includes a €90 billion loan package from the European Union.

She said continued international support is critical as Ukraine faces ongoing attacks, particularly on its energy infrastructure, and works to ensure stable functioning of the state.

A recent joint report by the World Bank, European Union, United Nations, and the Ukrainian government estimated that rebuilding Ukraine will cost around $588 billion over the next decade.

IMF Managing Director Kristalina Georgieva said the new loan will help resolve Ukraine’s balance of payments issues and restore medium-term economic stability. She added that it will also support reconstruction efforts after the war and assist Ukraine in its goal of joining the European Union.

Georgieva praised the Ukrainian authorities for maintaining macroeconomic and financial stability despite the prolonged conflict. She noted that the government has worked to increase domestic revenues and advance reforms.

The IMF programme will focus on structural reforms, including fighting corruption, reducing tax evasion, reforming the energy sector, and strengthening financial market systems. Georgieva said the programme could be adjusted if successful peace negotiations take place.

However, she warned that economic conditions remain challenging. Growth is slowing, and the outlook remains highly uncertain due to the ongoing war.

The IMF projects Ukraine’s economy will grow between 1.8% and 2.5% in 2026, following estimated growth of 1.8% to 2.2% in 2025. Inflation is expected to fall to around 6.1% this year, compared to 12.7% in 2025, showing signs of stabilisation.

Ukraine’s financing gap for 2026 is estimated at $52 billion. The IMF said this will be covered through the new IMF programme, European Union assistance, support from the Group of Seven (G7) countries, and bilateral aid.

Several IMF member countries, including the United States, Germany, Canada, Britain, and Japan, have reaffirmed support for Ukraine and recognized the IMF’s preferred creditor status. Other supporting countries include France, Italy, Spain, Poland, Sweden, and several European nations.

The Group of Creditors of Ukraine has agreed to extend the current debt standstill and complete a final debt treatment once economic uncertainty reduces.

The IMF said the programme carries high risks due to the ongoing war. Its success will depend on continued international financial support and Ukraine’s commitment to implementing reforms.

Ukraine’s progress under the programme will be reviewed every quarter. A total of nine reviews are planned over the next four years to monitor reform progress and financial stability.