The International Monetary Fund has signed off on a $17.5bn (£11.8bn) four-year aid programme for Ukraine, the second attempt in less than a year to help the country avoid bankruptcy.



The programme includes an immediate payment of $5bn for general budget support to help stabilise Ukraine’s listing economy.

Christine Lagarde, the head of the IMF, said the aim was to provide immediate economic stabilisation for a country beset by conflict.

The programme was ambitious and involved risks, Lagarde said, “notably those stemming from the conflict” with pro-Russia separatists in eastern Ukraine. “With continued firm implementation, there is reasonably strong prospect of success.”

The IMF loan is expected to unlock further credits from other donors. Ukraine will also pursue debt-restructuring talks with existing bondholders.

The combined package of assistance is estimated at $40bn, the IMF has said.



In a televised statement, Arseny Yatseniuk, UKraine’s prime minister, said the IMF move would let the country tap $7.5bn in other loans. Another $15.4bn is expected in debt relief, according to sources familiar with the IMF programme.

The head of the International Monetary Fund, Christine Lagarde. Photograph: Adam Berry/Getty Images

“[The money] will be used to stabilise the currency. It will enable the Ukrainian economy to grow from 2016,” Yatseniuk said.

The IMF approved a $17bn two-year loan to Ukraine last year, but deemed it insufficient to support economic reforms while the government continued to battle pro-Russia separatists.

Pro-Russia rebels and the government agreed to a peace deal in Minsk last month, but both sides continue to accuse each other of violations.

The unrest in the east follows months of upheaval from anti-government protests and Russia’s subsequent annexation of the Crimea region.

Lagarde said last week that an injection of financial support for Ukraine and its success largely hinged on the stability in the eastern of the country and how the security crisis was resolved.

After a year of political upheaval and war, Ukraine’s economy is in a tailspin with a currency that just pulled back from record lows, the highest interest rates in 15 years, and central bank reserves of only $6.4bn, barely enough to cover five weeks of imports.

Ukraine’s parliament last week approved a raft of IMF-backed amendments to its 2015 draft budget that were key preconditions for IMF approval of the bailout.

The fund complimented those steps, including the willingness of Ukraine officials to let the currency float. “They have maintained fiscal discipline in very difficult conditions,” Lagarde said.

