The International Monetary Fund (IMF) has pushed Ukraine to increase its estimate of foreign financing needs through 2027 to about $65bn, significantly higher than the government’s initial projection of $38bn, Bloomberg reported on September 23, citing officials familiar with the discussions.

The revision comes as Ukraine seeks to secure long-term support from international donors while its war with Russia shows no sign of abating. Kyiv is negotiating a new four-year Extended Fund Facility (EFF) loan programme with the IMF before the end of the year, having already used much of the $15.5bn programme approved in 2023, which runs until the spring of 2027.

Ukrainian President Volodymyr Zelenskiy met IMF Managing Director Kristalina Georgieva in New York on September 23 ahead of the United Nations General Assembly. “We discussed the possibilities of using frozen Russian assets for the benefit of Ukraine and all potential avenues of cooperation, including a new program aimed at supporting our country’s resilience in the coming years,” Zelenskiy said on X.

The agreed estimate of $65bn has already been communicated to the European Commission, which is Ukraine’s largest donor. It now intends to channel much of the required funding from frozen Russian assets as part of the mooted Reparation Loans as the only possible source of money to meet the expanded bill, as bne IntelliNews discussed in a recent feature on Ukraine and Russia’s budgets compared side-by-side.

Timothy Ash, senior sovereign strategist at BlueBay Asset Management in London, said in an emailed note the IMF was now working on the assumption of a protracted conflict.

“The Fund is now assuming an indefinite war scenario which seems harsh reality as the Trump peace effort seems to be going nowhere fast,” he said. “Hence the fund now suggests the financing envelope for the current programme at $153bn plus $65bn, or $218bn. Excluding Eurobond restructuring, that’s an annual Western budget and balance of payments funding requirement of nearly $50bn per year.”

Ash added that when military support is included, the figure rises sharply. “As I have long argued, that is only half the reality. The total is nearer to $100bn per year, all in, including budget, balance of payments and military support. And that is just to keep Ukraine in the war, and to win I think it is closer to $150bn a year.”

Ukraine’s Ministry of Finance and the IMF declined to comment, according to Bloomberg. Other commentators have suggested that a macroeconomic crisis is approaching for Ukraine as the question of sourcing the additional funding is not decided soon.

Ash argued that Europe will now have to step up. “Europe (with a bit of help from Japan and Canada) will need to write an additional cheque for Ukraine for budget and financing needs of $65bn, for the next 18 months, in effect. That is a huge additional commitment and comes as monies in the EU’s MFA and the G7 ERA are in effect exhausted. So, this is new money needed, in addition to Europe providing probably at least as much in terms of cash for military support to Ukraine.”

He warned that the use of frozen Russian central bank assets was now unavoidable. “There is simply no alternative now but for Europe to use the underlying CBR assets to fund Ukraine. Europe either uses these assets or Ukraine loses the war. It is that stark, simple.”

However, EU member states remain divided on the Reparation Loans scheme, which many see as endangering the reputation of the euro and possibly threatening the stability of the EU banking system. French President Emmanuel Macron said at the weekend that France is against the scheme.

While the size of the new IMF loan has not yet been finalised, preliminary estimates suggest it could amount to around $8bn, Bloomberg reported, with negotiations on the programme’s terms expected to take place in Kyiv in November.