Thursday, 1 May 2014

Ukraine crisis: IMF approves $17B US bailout amid risks

IMF Ukraine

The International Monetary Fund board on Wednesday approved a two-year, $17 billion US loan package for cash-strapped Ukraine as it seeks to regain stability following Russia's annexation of Crimea.

The IMF aid pledged in March will allow the immediate disbursement of $3.2 billion US to Kyiv. It was hinged on economic reforms in Ukraine, including raising taxes, freezing the minimum wage and raising energy prices — all steps that could hit households hard and strain the interim government's tenuous hold on power.​
Ukraine's interim government finds itself caught between the demands of international creditors and a restive population that has endured decades of economic stagnation, corruption and mismanagement.

The IMF's decision to approve the $17 billion US loan paves the way for Ukraine to receive $15 billion US in additional assistance pledged by the World Bank, the European Union, Canada, Japan and other European entities, and $1 billion US in loan guarantees from the U.S. that Congress recently approved. As part of the deal, Ukraine will be required to use some of the $17 billion US loan to repay money it already owes the monetary fund.

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