KYIV, March 23 – President Volodymyr Zelenskiy reached out to the leader of the International Monetary Fund early Monday seeking an urgent assistance as Ukraine’s economy is rapidly slowing amid crippling coronavirus pandemic.
The phone call with IMF Managing Director Kristalina Georgieva comes days after the Ukrainian central bank has shelled out about $2 billion over two weeks to support the hryvnia, which had still lost 10% of its value against the U.S. dollar.
The pressure come as global demand for steel, Ukraine’s main export commodity, is tumbling due to weakening demand coronavirus COVID-19, while the outbreak of the illness in Ukraine is shutting down much of the economy.
"We have discussed an increase in the amount of Ukraine's support from the Fund in the face of major challenges to economy from the global pandemic,” Zelenskiy said in a statement after the call.
“Ukraine is aware that today it is necessary to act proactively and quickly to minimize the negative impact of the pandemic and its associated restrictions on the economy and the well-being of citizens,” he said.
Ukraine, which had discussed $5.5 billion loan from the IMF in December 2019, is now seeking a larger loan due to the outbreak of the coronavirus pandemic.
Ukraine is seeking an additional up to $4 billion in funding to help fight the pandemic, bringing to the total amount of requested loans to $9.5 billion, according to Yulia Kovaliv, deputy chief of the presidential office.
"We are expecting an additional need of about $3.5-4 billion to fight the coronavirus. These are the numbers we are discussing with the IMF,” Kovaliv said. “This is about the purchase of equipment, medicines, and additional payments to doctors.”
Georgieva, after the call tweeted that the conversation with Zelenskiy was “constructive” and expressed “support for Ukraine as the country confronts the tremendous challenges caused by COVID-19.”
The IMF is expecting that the coronavirus pandemic may deal a serious blow to global economy in 2020 that may have potentially a bigger impact than the financial crisis of 2009.
The IMF pledged to make available up to $1 trillion in lending to those countries that are struggling with the pandemic.
Ukraine, which also issued a stay-at-home order for most of the country, is only at the beginning of this impact and more financial pain is probably ahead, including weakening hryvnia and an economic contraction this year.
Ukraine’s economy may shrink 4% on year in 2020, while the hryvnia will lose value and trade at UAH 30/dollar later this year, according to the latest forecast from Dragon Capital, an investment bank.
But if the lockdown continues through June-July, Ukraine’s economy may contract 9% on the year in 2020 with the hryvnia trading at UAH 35/dollar, Dragon Capital said. (tl/ez)