Ukraine expects the International Monetary Fund to formally approve a new $8.2 billion programme in the coming weeks, the country's head of debt management told Reuters in London, describing the likely Board decision as a telegraphed - but symbolically important - endorsement as the conflict with Russia continues.
The proposed IMF arrangement is designed as a successor to an existing $15.6 billion facility. Officials say the new programme will underpin Kyiv's ability to preserve economic stability and finance public spending amid what the government expects to be a near $140 billion budget shortfall over the next few years.
Yuriy Butsa, who has led Ukraine's debt management office for many years, said he anticipated formal IMF Board sign-off "in a matter of weeks." Speaking from London where he was attending meetings, Butsa added: "I think February is still doable in terms of a timeline." The comment came as the four-year anniversary of the war is February 24 and the wider conflict is described in official comments as about to grind into a fifth year.
Since the start of Moscow's invasion, Ukraine has required substantial external support from Western governments and international institutions and has completed a sovereign debt restructuring in excess of $20 billion. Butsa said that, for the current and coming year, Kyiv has already agreed on fiscal numbers and will meet the budget gap using commitments already secured.
"As of now we are waiting for the new IMF programme, but we already agreed on all the numbers for this and next year and will cover it (budget deficit) from existing commitments," he said, and he also expressed appreciation for the EU's recently announced 90 billion euro loan.
Asked about talk of a possible U.S.-brokered ceasefire timed around this month's anniversary, Butsa said he was cautious. Ukrainian President Volodymyr Zelenskiy had said on Wednesday that the United States needed to exert more pressure on Russia if it wanted the war to end by summer, and that it was unclear whether Moscow would attend planned U.S.-brokered peace talks next week.
Butsa cautioned against optimism on the basis of tentative diplomatic signals. "We need to plan everything cautiously, we cannot get over optimistic about any news flow," he said, adding that even a ceasefire would not remove Ukraine's fiscal and defense demands. "The reason for that is, even for a ceasefire, we believe that we need to maintain a strong and large army and we will still need to re-arm ourselves."
Reflecting a conservative financing strategy, Butsa said Ukraine was unlikely to rush back to international markets to issue sovereign debt immediately if the war ends. Instead, the government plans to continue relying on low-cost concessional lending and to expand borrowing in local currency markets, where the state does not bear currency mismatch risk.
Underpinning the planned IMF programme is a debt sustainability analysis, or DSA, which constrains Kyiv's ability to extend sovereign guarantees to state-owned enterprises seeking to restructure. "We have very severe limitations on the sovereign guarantees, because it’s all part of the same DSA," Butsa said. "So we cannot really issue guarantees," he added, noting that the government could still assist state firms by helping them develop "proper long-term business models." This constraint specifically affects entities such as Ukrainian Railways and Naftogaz.
Another focus for this year will be the gradual easing of wartime capital controls. The government aims to progressively lift restrictions, including a key step to permit international investors to repatriate principal - the "core money" - they place into Ukrainian local currency bonds. Butsa characterizes that ability as "an important element" of the strategy to increase sales of domestic-currency securities in the future and said the measure could be implemented prior to the end of the war.
Ukraine is also working with Clearstream, the Deutsche Boerse-owned European clearing house, to enhance the attractiveness and operational plumbing of its local bond market. The government has signalled an ambition to join the European Central Bank's TARGET2 payment settlement system, which handles large volumes of euro-denominated payments and trades. "We don’t have much of a legacy (system) to care about, so we’re happy to build immediately what works the best," Butsa said, and he noted the state will likely begin searching this year for a strategic partner firm to aid in the build-out.
Restoring Ukraine's presence in emerging market local-currency debt indices is another stated objective. The country once had a single bond included in a major local sovereign debt benchmark - a bond that matured in March 2022 - and officials are keen to win re-entry. "That is definitely part of our strategy - we want to come back," Butsa said. "Our aspiration is to have our bonds index-eligible and to have our local market as a very large and sustainable source of funding."
Overall, Kyiv's debt management strategy as outlined by Butsa emphasizes using concessional and local-currency funding where possible, preserving fiscal discipline through the terms of a new IMF programme and DSA constraints, and upgrading market infrastructure to attract international investors while cautiously planning for uncertain security developments.