IMF needs to be bold on Ukraine

DEBATES are emerging about what role the International Monetary Fund should play in Ukraine amid Russia’s barbaric invasion. Ukrainian officials have stated publicly they want the IMF’s support. Naysayers abound, understandably concerned about risks. But the IMF has ample scope to move forward, consistent with its mandate. It needs to be bold and act now.

Some analysts are sceptical about IMF involvement in Ukraine at this time. Former senior IMF officials are concerned about the Fund appearing overly sympathetic to the West. Others worry about debt sustainability even if there is a small programme. Some fret how the Fund would be repaid if Russia were to win, while others worry about violating Fund rules and precedents. In “Macroeconomic Policies for Wartime Ukraine”, the Centre for Economic Policy Research (CEPR) lays out in effect the case for why the Fund could play a critical role, yet curiously observes in a footnote that ‘further funding via a “normal IMF’ programme is not in the cards”.

A war-besieged Ukraine undoubtedly poses nettlesome issues for the IMF’s traditional operations. That reality cannot be minimised. But a sound case can be made for IMF involvement, consistent with the Fund’s mandate and procedures.