Ukraine is getting a massive IMF bailout to prop up its struggling public finances, announced early Thursday.
Here’s the full text of IMF managing director Christine Lagarde’s statement, and here’s the crucial bit:
I am pleased to announce that the IMF team working in Kiev has reached a staff-level agreement with the Ukrainian government on a new economic reform program that would be supported by an Extended Fund Facility of SDR 12.35 billion (about $US17.5 billion, €15.5 billion) from the IMF, as well as by additional resources from the international community. I intend to recommend this program for consideration to the IMF Executive Board. This new four-year arrangement would support immediate economic stabilisation in Ukraine as well as a set of bold policy reforms aimed at restoring robust growth over the medium term and improving living standards for the Ukrainian people…
The change in the IMF-supported program (from Stand-By Arrangement to Extended Fund Facility) will itself provide more funding, more time, more flexibility, and better financing terms for Ukraine to implement its reform agenda. These IMF resources will be complemented by other bilateral and multilateral financing. In addition, as the Ukrainian government has previously announced, it intends to hold consultations with the holders of their sovereign debt with a view to improving medium-term sustainability. From these various sources taken together, a total financing package of around $US40 billion is estimated over the four year period.
That’s the meat of it: The IMF is giving $US17.5 billion, and combined with other financial assistance Ukraine is getting, it all amounts to about $US40 billion in support over the next four years. The overthrow of Ukraine’s previous government and the war in the east of the country have been a huge hit to the country’s public finances.
That’s the only good news this morning. The Minsk peace talks seem to be falling apart, at least according to Ukrainian president Petro Poroshenko. According to the BBC, he said that Russia’s position is still “unacceptable” and that there is “no good news yet”.