Ukraine could soon need US$4 billion a month just for power and water after Russia bombed energy infrastructure, IMF says
- The IMF envisaged Ukraine’s external financing at about US$3-4 billion a month next year but sees that rising to US$5 billion in a worst-case scenario
- Russia stepped up attacks on Ukraine’s infrastructure this month causing nationwide blackouts and forcing the country to ration energy use
Russia’s latest strikes on civilian infrastructure have raised the cost of Ukraine’s recovery and could see it needing close to US$4 billion a month just to keep power and water supplies going, the head of the International Monetary Fund said on Wednesday.
The IMF had predicted Ukraine’s external financing needs would be about US$3-4 billion a month next year, but sees that rising to US$5 billion in a worst-case scenario, after Russian forces rained missiles and drone attacks on Ukraine’s energy infrastructure.
Speaking in Berlin, IMF managing director Kristalina Georgieva said the institution was focused on helping Ukraine keep afloat now while working on a longer-term programme whose size and duration were yet to be worked out.
She also signalled that China should be allowed to participate in an international platform that the European Commission wants to set up this year for Ukraine.
“We still hope that we can stay within these parameters of US$3-4 billion, but what changed since we had this discussion is Russia’s terrible bombing of civilian infrastructure,” she said.
“Just to get electricity back and water supply back we are moving towards the upper range of US$4 billion ... Just imagine a worst-case scenario.”
Russia stepped up attacks on infrastructure this month at the same time as its forces were being pushed back by advancing Ukrainian troops. The attacks caused nationwide blackouts and forced Ukraine to ration energy use. Moscow has acknowledged targeting energy infrastructure but denies targeting civilians.
Ukrainian President Volodymyr Zelensky said this week that Russian attacks had destroyed more than a third of the country’s energy infrastructure.
German Chancellor Olaf Scholz said there needed to be a new “Marshall Plan” to rebuild Ukraine, comparing the challenge to the US funding of Europe’s reconstruction after World War II.
A report by the World Bank, the Ukrainian government and the European Commission last month suggested it would cost nearly US$350 billion to rebuild the country.
The IMF has supported Ukraine, already one of Europe’s poorest countries before the war, with successive aid-for-reforms programmes and urged the country to tackle corruption.
Georgieva said that discussions with Ukraine since the Russian invasion in February are more led by the government wanting to do the “right thing” for the economy. “So a terrible war actually made Ukraine a better country”, she said.
Asked about China participating in the European Commission’s platform for Ukraine, she said “it is actually best if the whole world comes together”.