The first loan to be approved for a country at war is expected to be approved in the coming weeks.
It would be one of the largest financing packages that Ukraine has received since Russia's invasion.
In 2022, Russia's invasion of Ukraine has had a devastating impact on the economy as activity contracted by 30 percent, a large share of the capital stock has been destroyed and poverty levels have climbed, according to Gavin Gray, an official for the International Monetary Fund.
The programme has been designed in line with the new fund's policy on lending under extremely high uncertainty, and strong financing assurances are expected from donors, including the G 7 and EU. Mr Gray said that the agreement would mobilise large-scale concessional financing for Ukraine from international donors and partners, without giving further details.
Ukrainian Prime Minister Denys Shmyhal said that funding would help the country finance all critical expenditure and strengthen our relationship with other international partners. US Treasury Secretary Janet Yellen, who visited Ukraine last month, said : An ambitious and appropriately conditioned IMF programme is critical to underpin Ukraine's reform efforts. The US is the largest shareholder in the world and the biggest contributor to Ukraine in terms of money spent.
Nearly half a billion dollars of U.S. military aid was given to Ukraine earlier this year, according to President Joe Biden. This was on top of the $112 billion that Congress spent in 2022 alone.
Military aid, which accounts for more than half of US spending in Ukraine, pays for drones, tanks, missiles and other munitions systems as well as training, logistics and intelligence support.
Since Russia invaded Ukraine in February, money has been pour into the conflict from all over the world.
Without mentioning Ukraine, it said the measure applied to countries experiencing exogenous shocks that are beyond the control of country authorities and the reach of their economic policies.