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IMF approves $17 billion aid for Ukraine

Published on May 1, 2014 6:22 AM
Armed pro-Russian activists stand guard at a checkpoint near the south eastern Ukrainain city of Slavyansk on April 30, 2014. -- PHOTO: AFP 

WASHINGTON (AFP) - The International Monetary Fund (IMF) approved on Wednesday a US$17 billion (S$21 billion) aid deal for Ukraine, even as Kiev fights to prevent pro-Moscow separatists from hiving off another chunk of the country.

The IMF executive board's green light opens the way for an immediate deployment of US$3.2 billion to Kiev, which faces deep fiscal problems, compounding its political crisis.

Part of a US$27 billion bailout including the World Bank, European Union and others, the IMF said the rescue plan "aims to restore macroeconomic stability, strengthen economic governance and transparency, and launch sound and sustainable economic growth, while protecting the most vulnerable". The Fund has warned though that the Ukraine economy faces a 5.0 per cent contraction this year, even with the two-year loan programme.

Some of the initial disbursements could be turned around to pay off an outstanding US$2.2 billion bill for natural gas from Russia, which has threatened to cut off fuel supplies to its former Soviet republic.

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