WASHINGTON: The introduction of a special new account by the International Monetary Fund (IMF) to allow bilateral donors and international organisations a secure route to transmit financial resources to war-torn Ukraine was welcomed by Ukraine’s finance minister on Monday.

After the Canadian government proposed disbursing up to $1 billion Canadian dollars through the vehicle, which would be handled by the IMF, the IMF’s executive board approved the opening of the new account on Friday.

Donors will be able to contribute grants and loans to the Ukrainian government to help it meet its balance of payments and budgetary obligations, as well as stabilise its economy, as it fights Russia’s murderous invasion.

Russia calls its actions a “special military operation.”

“Donors will benefit from the IMF’s tested infrastructure to quickly deliver authenticated payments,” the IMF said.

According to analysts, going through the global lender will allow donations to Ukraine to be stopped in the case of a Russian takeover of power.

Donors will deposit reserve currencies or Special Drawing Rights, the IMF’s own reserve currency, into the new account, which will then release these funds to Ukraine’s SDR account at the fund as grants or loans.

Serhiy Marchenko, Ukraine’s finance minister, announced last week that his administration is seeking an additional 4 billion euros ($4.37 billion) in external financing to supplement the 3 billion euros it has already obtained to address a budget gap.

Last month, IMF experts predicted that Ukraine’s economy will collapse by 10% in 2022 as a result of the invasion, but warned that the situation may quickly deteriorate if the fighting continues.

Additional donations are planned for both the IMF account and a separate World Bank account established up for Ukraine during the two major financial institutions’ spring meetings next week, according to a person familiar with the arrangements.

In March, the IMF authorised a $1.4 billion loan to Ukraine through its Rapid Financing Instrument.

IMF personnel are continuing to work closely with the authorities on their emergency response to the economic disruptions caused by the conflict in Ukraine, according to the institution.

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