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KIEV. – The IMF announced yesterday a $14-$18 billion bailout for Ukraine to avoid bankruptcy but tied to painful and unpopular reforms amid the country’s escalating standoff with Russia.
The agreement in principle – worth $14-$18bn – imposes tough economic conditions on the crisis-hit country. The reforms already outlined will have a huge impact on millions of Ukrainians who have grown accustomed to the comforts of Soviet-era subsidies and social welfare benefits.
But the agreement appears to herald a fundamental shift in Kiev from attempts to save a crumbling and outdated system through Russian assistance, to a commitment to the types of free-market efficiencies which
could one day bring Ukraine far closer to the West.
“Ukraine’s macroeconomic imbalances became unsustainable over the past year,” the Fund’s Ukrainian mission chief Nikolai Georgiyev told reporters.
“The goal of the authorities’ economic reform programme is to restore macroeconomic stability and put the country on the path of sound governance and sustainable economic growth while protecting the vulnerable in the society,” he said.
The International Monetary Fund’s rescue will form the heart of a broader package released by other governments and agencies amounting to $27 billion over the next two years.
Georgiyev said the actual size of the “standby arrangement” would be determined only once the new Western-backed leaders in Kiev made the first firm steps to implement reforms the Fund had sought in vain from the cabinet of Kremlin-backed president Viktor Yanukovych.
That government was toppled in February by three months of deadly protests.
The unrest resulted in the Kremlin seizing Ukraine’s Russian speaking Black Sea peninsula of Crimea in a lightning offensive which
sparked the worst East-West crisis since the Cold War.
“The programme will be approved by the IMF board when the steps that I mentioned are implemented,” Georgiyev told reporters after holding a decisive round of talks with Ukrainian President Arseniy Yatsenyuk on Wednesday.
“We expect (the approval) by the end of April.” – AFP.
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