The international lender had initially demanded more assurances over Kyiv’s financial stability before approving the loan — this came when a majority of EU countries agreed late last year to raise €90 billion in joint debt to shore up Ukraine against Russia.
But the IMF’s cash cushion is tiny. Kyiv’s budget shortfall is set to widen beyond $50 billion this year, putting pressure on the EU to overcome a dispute with Hungary that’s blocking crucial financial support.
The EU’s planned €90 billion loan to Ukraine would help plug the gap. But Hungary is blocking the financing package amid accusations that Ukraine is deliberately slow-walking repairs to the damaged 4,000-kilometer Druzhba pipeline, which carries vital supplies of Russian oil to Hungary, on political grounds.
Ukraine has dismissed the accusations. The European Commission has also downplayed the risk of an immediate energy crunch in Hungary, which has 90 days’ worth of oil supplies it can use.
In the meantime, Brussels’ top brass is trying to solve the dispute without playing into an anti-EU political campaign that Hungary’s prime minister, Viktor Orbán, is pursuing ahead of a national election in April.
The Hungarian leader has also weaponized anti-Ukraine sentiment ahead of the election, with his political party, Fidesz, trailing the opposition, Tisza, in the polls by a wide margin. A loss would see Orbán’s 16-year reign come to an end.