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IMF, World Bank aid for Ukraine

February 12, 2015

Ukraine is bracing for harsh reforms in return for extra aid offers from the IMF and the World Bank. The fresh resources are meant to help get the country on its feet again and push through crucial reforms.

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ATM machines in Kyiv Photo: Jens Kalaene
Image: picture-alliance/ZB

Ukrainian Prime Minister Arseniy Yatsenyuk said Thursday a forthcoming IMF aid package of $17.5 billion (15.4 billion euros) over the next four years "presupposed very difficult reforms."

He said the additional resources offered by the International Monetary Fund would be part of an international financing package totaling around $40 billion and would go a long way towards helping the ex-Soviet republic move away from the brink of bankruptcy.

IMF chief Christine Lagarde said the deal still required the approval of the executive board, adding she would submit it for review "hopefully before the end of February."

Optimism prevails

Lagarde said there could be no doubt that the offer was meant to be in return for more reforms in Ukraine, but hinted she was pleased with what the new government had achieved so far.

She specifically mentioned Ukraine's willingness to address a number of former taboo issues, for example adopting a flexible exchange rate regime and significantly increasing household gas and heating prices.

Also on Thursday, the World Bank said it would provide Ukraine with up to $2 billion in support for 2015, with assistance focused on aiding the poor and backing reforms. Since Ukraine joined the World Bank in 1992, the lender's commitments to the country have totaled over $9 billion for 45 projects and programs.

Ukrainian Prime Minister Yatsenyuk pledged the emphasis in the years ahead would be on fighting corruption, cutting state spending and reducing red tape.

He added the Ukrainian economy could log some growth in 2016, if "Russian aggression" was halted and internal reforms proved a success.

hg/sri (Reuters, dpa)