IMF to loan Ukraine up to £10bn
Published 27/03/2014 | 08:47
The International Monetary Fund says it will loan Ukraine's fledgling government between 14 billion and 18 billion US dollars (£8.5 billion to £10 billion).
The new administration is struggling to keep the country's economy afloat after three months of anti-government protests, and Russia's takeover of the Crimean peninsula has exacerbated the issue.
After talks in Kiev, the IMF said the precise amount would be determined once Ukrainian authorities offered more precision on their needs and it was clear what other aid the country would receive.
Meanwhile, US politicians are rushing to get a bill to the president's desk that would provide another billion dollars (£600 million) in loan guarantees to Ukraine and sanction those who had a hand in Russia's takeover of Crimea.
The House and Senate are poised to pass versions of the legislation later today. Both sides say they want to get one bill to president Barack Obama's desk before the end of the week, but it is unclear whether the work will be finished by then.
The Ukraine aid bill gained momentum this week after Senate Democrats backed down and removed IMF reform language which was stalling the bill's progress. With Russian troops massed on Ukraine's eastern border, Democrats decided it was more important to show support for Ukraine than push now for IMF changes.
The IMF the "support from the broader international community" could be as high as 27 billion dollars (£16 billion).
The IMF loan hinges on structural reforms Ukraine has pledged to undertake.
Russia is raising natural gas prices for Ukraine and households should expect their bills to double in May, Ukrainian officials said.
Ukrainian prime minister Arseny Yatsenyuk told parliament today that the country is "on the brink of the economic and financial bankruptcy" and that its economy could drop 10% this year unless urgent steps are taken.
The reforms his new government agreed to in exchange for the loans will hit households hard, which could severely diminish the new government's popularity at a time when it is struggling to establish itself in Kiev and has already lost territory to Russian forces.
The IMF said recent economic policies had drastically slowed growth and brought foreign currency reserves to a "critically low level", and added that the reforms will include maintaining a flexible exchange rate and reforming the energy sector to make it profitable, all of them potentially painful for the majority of the population.