IT MAY go down as one of the least effective bail-outs the world has ever seen. Not Greece’s, but Ukraine’s. Just two weeks ago Christine Lagarde, the head of the International Monetary Fund (IMF), promised Ukraine $40 billion over four years—an impressive-sounding sum for a country whose GDP may soon shrink to $70 billion. Since then, however, Ukraine’s economic crisis has got much worse. The currency has hit new lows: a dollar now buys around 30 hryvnia (see chart). This week the central bank instituted new currency controls in a fruitless attempt to slow its plunge. Government bonds are trading at 40 cents on the dollar. The main problem, of course, is the war in the east of the country, which, in addition to claiming many lives, is draining state coffers, putting investors to flight and bringing life in and around the war zone to a standstill. But the bail-out itself is another source of uncertainty. No one is sure where the money will come from. The IMF pledged $17.5 billion. A few billion dollars may come from other donors, including the European Union and America. Even if all goes to plan—and it probably will not—the pot is a long way short of $40 billion.

It is nearly six months since the IMF actually disbursed any cash to Ukraine. That leaves the central bank fighting a lonely battle. On February 23rd it stopped banks from lending to clients to buy foreign currencies. Two days later it banned banks from buying foreign currencies for its customers. Such controls are, at best, a salve.

As part of the underwhelming bail-out, the government will soon have to do what it and the IMF long dismissed as unnecessary: restructure its debts. Excluding the output of the areas held by pro-Russian rebels and of Crimea, which Russia seized last year, Ukraine’s debt-to-GDP ratio has probably hit 100%. The shrinking economy will push that number up while sapping revenue.

According to Ondrej Schneider of the Institute of International Finance, a think-tank, the IMF’s plan implies that Ukraine will not make any debt repayments whatsoever over the next four years. The government, however, has not started negotiations with its creditors, says Timothy Ash of Standard Bank. One, in particular, will prove obstructive: Russia, which lent $3 billion to a previous Ukrainian administration, with which it got on much better. On February 24th Russia’s deputy finance minister dismissed the idea of a restructuring. If Russia holds out for full repayment, other creditors may do the same.

Default would be embarrassing for the government, but things cannot get much worse for ordinary Ukrainians. By the end of the year they are likely to be a third poorer than when the Soviet Union collapsed. Inflation is 29% and will get much higher thanks to the hryvnia’s slump. To tame inflation and support the currency, interest rates, already 20%, will rise further. That will make it more difficult to repay loans. Added to all that is government austerity, on which the IMF is insisting. By 2017 domestic gas prices will have increased to five times the level of 2013. The government is freezing pensions. With such high inflation, that amounts to a substantial cut. Even if the war stopped tomorrow, there would be a lot more pain to come.