The US is pressing EU countries to speed up and increase financial support for Ukraine as the IMF explores new ways to send cash to Kyiv.
Senior officials in the Biden administration have voiced frustration at Brussels over the slow disbursement of European aid to Kyiv, said four officials speaking under the condition of anonymity. They have also requested Brussels set up a “regular mechanism” for financial support, they said.
Washington has been “in frequent contact” with the European Commission and EU member states about the need to “expeditiously deliver promised economic assistance to Ukraine”, one US official said, adding: “We reiterate our call for all of Ukraine’s partners to more quickly deliver promised assistance to Ukraine, to increase their commitments, and to prioritise assistance in the form of grants over loans.”
The US wants to increase support for Ukraine’s economy at a time when Kyiv is seeking to regain territories from Russian forces in the south-eastern part of the country. Washington used meetings on the sidelines of the UN General Assembly last week to urge European partners to fix bottlenecks holding up the cash, according to a European official with knowledge of the discussions.
Another EU official said Ukraine’s prime minister Denys Shmyhal met European Council president Charles Michel to stress Kyiv needed about €3.5bn each month. “The one message . . . was an urgent need to see the [money]. He was pleading for this to come as fast as possible” — whether in loans or grants, the official said.
Washington has provided $8.5bn in economic assistance to Kyiv, and requested an additional $4.5bn in grants from Congress.
Meanwhile, Brussels has paid €1bn of the €9bn it pledged in May. It agreed to the release of another €5bn this month but is yet to disburse the funds. It hopes to pay out the remaining €3bn by the end of the year.
This comes in addition to a €1.2bn EU loan earlier this year, equivalent to a third of the Ukrainian government’s monthly external financing needs.
A senior US official said: “We look forward to the EU beginning delivery of the €5bn in pledged assistance starting next month and urge the EU to quickly develop a regular mechanism to keep delivering budget support to Ukraine going forward.”
A spokesperson for the commission said: “It is important to stress that an exceptional package of this extraordinary size requires careful budgetary management to ensure that any risks to the budget are adequately covered by the required budgetary cover. This calls for careful consideration and hence required more time.”
Separately, the IMF is studying ways to bolster its immediate assistance to Kyiv while simultaneously progressing towards a full-fledged lending programme, subjecting the country to certain economic and financial conditions.
IMF managing director Kristalina Georgieva also met EU leaders in New York, said a person briefed on the meetings, adding that a package to provide “budgetary support” to Kyiv was discussed.
The IMF is also considering expanding emergency help through a so-called “food shock window”. The mechanism, which is targeted at countries grappling with soaring food costs, is set to amount to about $1.3bn in additional funding and the hope is for the board to approve it by the time the annual meetings kick off in mid-October.
The fund was also working on a “monitoring instrument to provide a framework for policy advice and co-ordination, which could build toward a full-fledged programme when circumstances allow,” said Julie Kozack, the IMF reviewer for Ukraine.
These tools expand on earlier IMF help, including a $1.4bn emergency loan and an account, set up in April, to channel grants and loans from donors. Only $2.19bn has been committed through this account by Canada and Germany.