International Monetary Fund agrees to provide $16 billion to assist Ukraine

The International Monetary Fund (IMF) has approved a two-year standby arrangement for Ukraine worth more than $16 billion to help the Eastern European country’s authorities restore economic stability in the wake of the global financial crisis.

The IMF Executive Board approved the request yesterday under its Emergency Financing Mechanism, and about $4.5 billion will be immediately given to Ukraine as part of the agreement.

The Ukrainian economy has deteriorated as prices have fallen for steel, the country’s major export. High rates of inflation and low foreign exchange reserves are exacerbating the situation and local banks are also experiencing considerable stress.

In an effort to stabilize the domestic financial system, Ukrainian authorities have devised a plan involving monetary and exchange rate policy shifts, banking recapitalization and fiscal and incomes policy adjustments, the IMF said in a press release.

IMF Deputy Executive Director Murilo Portugal issued a statement describing Ukraine’s plan as “strong and comprehensive” given the gravity of the global financial situation.

“Decisive measures have already been implemented by the authorities, including the passage of anti-crisis legislation,” he said. “Moreover, the authorities’ policy framework is sufficiently robust to adapt to evolving circumstances.

“The commitment of leaders of the main political parties to the core elements of the programme increases the prospects for successful programme implementation. All these elements give confidence that the programme will succeed in stabilizing economic and financial conditions.”