Calls for Ukraine debt relief grow as IMF and World Bank provide fresh loans amidst crisis

6 April 2022

Amidst the worsening conflict in Ukraine, Ukrainian activists and international allies have called for the country’s unsustainable debts to be written off – including those owed to multilateral institutions such as the IMF and World Bank.

Ukraine’s external debt stood at $56.7 billion at the end of 2020, according to the IMF. Jubilee USA executive director Eric LeCompte noted in a 8 March article in Barron’s magazine that Ukraine owed $22 billion to international finance institutions (IFIs), stating: “The IMF holds more than a half of that…debt at $13.4 billion with $2 billion in debt payments owed this year…. Since Ukraine will most likely default on these payments, the IMF should act quickly to restructure the payments.”

The Fund’s executive board subsequently approved a $1.4 billion loan to Ukraine on 9 March via its Rapid Financing Instrument, while the World Bank also released a $723 million financing package on 7 March, including $589 million in new loans. While this financing provides much needed emergency support, it increases Ukraine’s substantial debt load further.

Ukraine is also being charged significant surcharges on its loans by the IMF, as a result of its borrowing being in excess of its IMF quota allowance (see Observer Spring 2022, Winter 2021). According to Belgium-based civil society network Eurodad, Ukraine is projected to pay $178 million in surcharges in 2022 alone.

“It just doesn’t make sense for countries like Ukraine to send tens of millions of dollars every month to fund the IMF in Washington as they confront war, pandemic, and economic crisis,” said US Congressman Jesús “Chuy” García, in a March press release announcing a new bill aimed at getting the US Treasury to support a suspension of IMF surcharges, pending a review.