The International Monetary Fund on Wednesday approved a bigger, high-risk bailout for Ukraine, giving Kiev immediate access to $5 billion of $17.5 billion in emergency IMF credit in another bid to keep the embattled country afloat.
Ukraine’s deadly conflict with Russia-backed militants in eastern Ukraine forced the fund to revamp its bailout program as the turmoil pushed the economy into a deep, two-year contraction, fueled a currency free fall, sparked rampant inflation and drained the central bank’s reserves.
IMF and Western officials now hope that a fragile cease-fire combined with painful budget-tightening and a host of economic overhauls will restore the country’s finances and growth outlook. The fund bailout is part of a larger, $40 billion international package that includes a yet-to-be-negotiated restructuring of some of Ukraine’s debt.
“This new four-year extended arrangement will support immediate economic stabilization in Ukraine and a set of deep and wide-ranging policy overhauls aimed at restoring robust growth,†IMF Managing Director Christine Lagarde said in a statement.
Ukrainian Finance Minister Natalie Jaresko said the IMF’s approval triggers more aid from the World Bank, the European Bank for Reconstruction and Development, the U.S. and other Western lenders.
