IMF creates new account to help Ukraine as Canada pledges funds

[WASHINGTON] The International Monetary Fund (IMF) is establishing a new account designed to give donor nations a secure way to provide support to stabilise Ukraine's economy after Russia's invasion.

The IMF board of directors approved the move on Friday (Apr 8), the institution said in a statement. The account would receive loan or grant resources from donors in either reserve currencies or special drawing rights, the IMF's reserve asset, and disburse support into Ukraine's account at the fund, the institution said.

The so-called "administered account" is set to allow interested countries to pool and to channel resources to help Ukraine meet balance-of-payments and budget needs arising from the war while supporting macroeconomic stability.

Bloomberg News earlier this week reported the IMF's plans to create the account.

"Donors will benefit from the IMF's tested infrastructure to quickly deliver authenticated payments," the fund said.

The government of Canada proposed in its recent budget has proposed up to C$1 billion (S$1.1 billion) to be disbursed through the account, and it will be available for any other IMF members or intergovernmental agencies and organizations that wish to use it as a vehicle to provide financial assistance to Ukraine, the IMF said.

The IMF last month approved a US$1.4 billion emergency loan for Ukraine designed to help the country. The Washington-based fund warned that the recession could eventually be in the range of 25 per cent to 35 per cent, based on data about real-time contractions in other nations ravaged by war.

The support also comes amid a slew of international efforts to bolster Ukraine's budget and raise money for both its armed forces and civilians.

The Ministry of Finance has raised about US$1.2 billion through the sale of domestic war bonds since the invasion started. It has separately received support from institutions and governments including the European Union and the World Bank. BLOOMBERG