IMF alarmed by Ukraine's $9.6 bln defense spending surge - Bloomberg
Illustrative photo: Ukraine to increase military spending due to deadlock in negotiations (Getty Images)
The IMF mission has reached an agreement with the Ukrainian government on the allocation of the next tranche of a $15.5 billion loan program. One of the issues discussed was the source of funds for increased military spending, informs Bloomberg.
According to the outlet, IMF staff approved a new tranche of about $500 million following a review during their visit to Kyiv this week. The agreement must still be approved by the IMF's Board, which is often a mere formality.
The IMF's negotiations with Ukrainian officials regarding the next tranche of funding did not reveal any significant disagreements.
However, the lender expressed concern over Kyiv’s plan to increase the military budget by approximately 400 billion hryvnias ($9.6 billion) this year, which would raise the deficit above 10% of GDP, according to sources familiar with the discussions.
The article highlights that the IMF recognizes the urgency of increasing military spending, given that attempts to reach a ceasefire agreement have stalled. Nevertheless, officials want Kyiv to clarify how it plans to finance the increase, one source said. Domestic borrowing could serve as a funding source, another person added.
Earlier, Ukraine has reached an agreement with the IMF mission to review the EFF program, paving the way for a new $500 million tranche.
