IMF announces bailout for Ukraine totalling as much as $23b

Members of Ukrainian self-defence units hold a rally outside an office of Sberbank of Russia, in Kiev, on March 26, 2014. The International Monetary Fund said on Thursday, March 27, 2014, it had agreed on a US$14 billion-US$18 billion (S$18 billion-S
Members of Ukrainian self-defence units hold a rally outside an office of Sberbank of Russia, in Kiev, on March 26, 2014. The International Monetary Fund said on Thursday, March 27, 2014, it had agreed on a US$14 billion-US$18 billion (S$18 billion-S$23 billion) bailout for Ukraine, a deal that will unlock further credits to reach a total of US$27 billion over the next two years. -- PHOTO: REUTERS

KIEV (AFP) - The International Monetary Fund said on Thursday it had agreed on a US$14 billion-US$18 billion (S$18 billion-S$23 billion) bailout for Ukraine, a deal that will unlock further credits to reach a total of US$27 billion over the next two years.

The agreement is intended to help Ukraine meet debt payments looming this year after months of anti-government protests which resulted in the overthrow of President Viktor Yanukovich and a standoff with Moscow in which Russia annexed the Crimea region.

"The mission has reached a staff-level agreement with the authorities of Ukraine on an economic reform programme that can be supported by a two-year Stand-By Arrangement (SBA) with the IMF," the IMF said in a statement.

"The financial support from the broader international community that the programme will unlock amounts to US$27 billion over the next two years. Of this, assistance from the IMF will range between US$14-US18 billion, with the precise amount to be determined once all bilateral and multilateral support is accounted for."

The agreement is subject to approval by IMF Management and the Executive Board, which will consider it in April.

"Following the intense economic and political turbulence of recent months, Ukraine has achieved some stability, but faces difficult challenges," the IMF statement said.

Announcing the agreement in the Ukrainian capital, Kiev, IMF mission chief Nikolay Gueorguiev declined to say how big the initial tranche of aid would be.

Kiev has said it desperately needs cash to cover expenses and avert a possible debt default. The country's finance minister has predicted the economy will contract 3 per cent this year, weakened by years of mismanagement and political turmoil.

The bailout from the IMF will help prop up Ukraine's economy and clear the way for several billion dollars in aid from the United States, European Union, Japan and other nations.

Ukraine's new leaders on Wednesday announced a radical 50 per cent increase in the price of domestic gas from May 1, meeting an unpopular condition for IMF aid that Mr Yanukovich had refused before he was ousted last month.

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