As Russia’s war on Ukraine rolled into a second agonizing year, the International Monetary Fund found itself with a problem: Ukraine needed more money, but the fund’s hands were tied.The fund ultimately changed its own lending rules, paving the way for it to provide a loan to Ukraine. It’s the first-ever IMF lending program to a country at war, yet another sign of the degree to which the invasion of Ukraine has galvanized much of the international community.
Still, the institution — which has long tried to position itself as technocratic and apolitical — could be perceived as more overtly acting as a policy tool of the U.S. and Europe.The big picture: This comes as some IMF member countries, including China, are somewhat sympathetic to Russia — and as the IMF is dealing with the“The fund was in an awkward position. This is a war commenced by one of its members against another — and technically, they're not supposed to take sides,” sovereign debt restructuring veteran Lee Buchheit tells Axios.
“You could argue that exceptional times require exceptional steps — and I agree with that, I'm all for supporting Ukraine. But, you could also argue that the IMF was not established for funding this type of program,” says Doug Rediker, managing partner at advisory firm International Capital Strategies. Rediker previously represented the U.S. on the IMF’s board.One of the most visible things the IMF does is provide loan programs to struggling nations.
They are going to lose every dime.