Emergency financing: keeping a state solvent

People think of wartime finance as weapons. Most of it is not. Most of it is the wage of a nurse in Poltava and the pension of a retired teacher in Vinnytsia, paid on time, in a month when tax revenue has fallen off a cliff and half the customs posts are closed.

The International Monetary Fund disbursed under its Rapid Financing Instrument in March — an emergency facility designed precisely for a shock of this kind, released without the usual programme negotiation. The World Bank opened an emergency support package. The European Union moved macro-financial assistance forward.

What that money actually does

Budget support is unglamorous and it is decisive. It keeps social payments flowing, which keeps demand alive in towns far from any front line. It lets a central bank hold reserves rather than burn them. And it signals to every commercial counterparty that the state will meet its obligations — which is the difference between a supplier granting credit terms and demanding cash in advance.

I ran a company through that quarter. That signal was worth as much as the money.