The World Bank is pushing for ‘fast track’ approval of an additional $350 million loan for Ukraine within days to provide emergency funds for its defense efforts against Russian invasion, officials said. said people familiar with the plans.
The expansion of an existing loan would provide “fiscal support” to Ukraine, leaving no restrictions on how President Volodymyr Zelenskiy’s government can spend it, the sources told Reuters.
One of the sources said the loan could be ready for board consideration as soon as the end of this week, while another said next week was also possible, with disbursement coming within days. following approval.
They said the plan had strong support within the World Bank’s 25-member board, despite objections from Russia’s executive director.
The United States and its Western allies control an overwhelming majority of the development lender’s voting shares.
A US Treasury spokesman declined to comment on the loan plan.
The decision to quickly transfer money to Ukraine has become more urgent at the World Bank since Russia invaded the country last week.
World Bank President David Malpass told Zelenskiy in Munich on Feb. 19 that the organization was preparing a disbursement of $350 million by the end of March, followed by other funding plans.
A World Bank spokesperson declined to provide details of the plan, but said: “We are currently preparing a fast-disbursing financing package for Ukraine, which we hope to present to our board for consideration. in the next few days”.
The sources described the disbursement as a “top-up” that would effectively double a $350 million development policy loan given to Ukraine on December 17 to support reforms aimed at fostering greater competition in the economy, land reforms and access to credit for small farmers.
The plan would bring World Bank lending to Ukraine in the past year alone to more than $1.5 billion, including loans for COVID-19 response and vaccinations, network improvements electricity and education.
World Bank financing to Ukraine has totaled $2.3 billion since the start of the COVID-19 pandemic in early 2020 and nearly $14 billion since the country joined the institution in 1992 .
The new funding would not add to Ukraine’s political commitments, and by expanding an existing loan, the bank can move to board approval much faster than if it were to launch an entirely new loan process. with new program goals, the sources said.
Part of the supplement funds may come from bilateral donor countries.
As the Russian invasion force in Ukraine grows, one of the sources said the $350 million disbursement could be delayed if Zelenskiy’s government is toppled before the transfer is ready.
“If on the day of disbursement there is concern that the funds will be misused, they will not be disbursed,” one of the sources said.
“Unless the bank is sure that the funds will return to the Ukrainian government, they will not be disbursed, until the very last moment.”
The plan marks a step into “extraordinary ground” in terms of lending speed and circumstances for the bank, which is best known for its post-conflict reconstruction lending, said Scott Morris, senior fellow at the Center for Global Development. and former American. Treasury official.
“It’s commendable that the bank is expanding in this way,” he said.
Malpass and International Monetary Fund Managing Director Kristalina Georgieva also said they were coordinating support for Ukraine.
Georgieva said on Friday that Ukraine had requested emergency financing from the IMF and that the Fund was exploring all options to help the war-torn country, including through some $2.2 billion in capacity under the of its existing IMF lending program.
