International Development Association to open $2 billion fund for Ukraine
The issue of compensating for the interest rates for preferential loans provided to Ukraine is being discussed (Photo:Elizaveta Sergienko/Press Center of the NBU)
The International Development Association (IDA) is expanding its support package for Ukraine and creating a separate fund with the ability to multiply the money raised, Finance Minister Serhiy Marchenko said in an interview with Interfax-Ukraine on April 28.
“In the near future, the fund will be announced, its name is SPURR, and the total size is $2 billion,” Marchenko said.
SPURR stands for Special Program for Ukraine’s Recovery and Crisis Response.
“This fund is multiplicative: roughly speaking, it achieves triple multiplication, which means that if $2 billion is raised, potentially Ukraine can receive $6 billion in aid,” Marchenko said.
Marchenko clarified that these are World Bank loan funds, and the multiplicative effect is very important.
The head of the Ministry of Finance also announced that the issue of compensating for the interest rates for preferential loans provided to Ukraine, in particular for recovery, is being discussed.
“It is important that these new funds do not affect our obligations to service debt. This is important for the IMF program and for maintaining debt sustainability. Therefore, we ask our partners for compensation of the interest rate if the loan funds are provided through the World Bank,” the minister said.
He said the World Bank’s previously created URTF – the Targeted Fund for Support, Recovery, and Reform in Ukraine, which includes grant funds, can be used for this purpose.
Marchenko said that the ministry is showing the already prepared instruments to potential donors for the country’s recovery: the URTF for grant funds and the SPURR for loans, but with the use of a multiplicative effect. The URTF fund can be used as a compensator for interest rates in the SPURR, according to the Finance Ministry’s plans.
The minister also noted that the mechanism for compensating the loan interest rate is already in place for the macro-financial assistance package from the European Union of EUR 18 billion ($19.8 billion) for this year.
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