“Last May, at the time it launched its Ukraine lending programme, the IMF estimated that Ukraine might need around $35 billion in official external support. Today, some six months later, it is estimating that Ukraine might need around $55 billion in official external financing.”
Lachman says, “One would have thought that this question would have been the main topic under discussion during [Ukrainian President Petro] Poroshenko’s U.S. visit. If Kiev “might need at least an additional $19 billion of external official support to see it through 2015, the White House has agreed to provide Ukraine around an additional $50 million in assistance. This leaves unanswered the basic question as to from where the remaining $18.95 billion is to be obtained,” the analyst says.
According to him, “This is not to argue that Ukraine’s economy is not worth supporting, especially considering the country’s geopolitical importance to the West. Rather, it is to argue that the U.S. taxpayer deserves a transparent and realistic discussion of how much money supporting Ukraine will in the end cost the official international community.” “In that respect, one has to hope that [U.S.] policymakers do not resort to backdoor financing of Ukraine through the IMF without appropriate legislative approval.
This is all the more so the case considering that any further substantial IMF lending to this war-torn country runs the risk of significantly compromising the IMF's balance sheet and undermining its credibility as a condition-based lender,” the analyst says.
Meanwhile, the IMF existing programme for Ukraine is estimated at some $17 billion for the next two years. IMF Communications Director Gerry Rice told reporters at a briefing on Thursday that Kiev had not officially asked for this programmes revision, although it is the key part of the international assistance package on the tentative amounts of which Lachman commented.