The International Monetary Fund agreed on Thursday to throw a new $17.5 billion lifeline to Ukraine, hoping to stabilize the country as it teeters on the edge of default. The new plan replaces a $17 billion emergency bailout that was extended last year after mass street protests in Ukraine ousted the country’s president, Viktor F. Yanukovych; Russia annexed Crimea; and a violent separatist uprising began in the east of the country. That uprising has now stretched into a nearly yearlong battle that has devastated Ukraine’s economy.
In addition to the heavy costs of the continuing military operation and the displacement of more than one million people from the east, Ukraine has had to grapple with a collapse in the value of its currency, the hryvnia, and spiking inflation. Trade with Russia, long Ukraine’s largest partner, has plummeted, paralyzing many industries. Foreign investment has dried up amid the turmoil. Treasury Secretary Jacob J. Lew, who recently visited Kiev to reiterate American financial support for Ukraine, issued a statement praising the new rescue plan.
“Fully implemented, this ambitious I.M.F. program will play an important role in helping to unleash Ukraine’s considerable untapped economic potential,” Mr. Lew said. Announcing the program in Brussels on Thursday, the fund’s managing director, Christine Lagarde, acknowledged that there were serious risks in providing any credit to Ukraine but said that the need for assistance was urgent.
“This new four-year arrangement would support immediate economic stabilization 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,” Ms. Lagarde said in a statement. “It is an ambitious program; it is a tough program; and it is not without risk.” If successful, she added, it “can represent a turning point for Ukraine.” Ms. Lagarde’s announcement came as peace negotiations in Minsk, Belarus, aimed at settling the conflict in eastern Ukraine yielded progress, including a cease-fire to take effect on Sunday. About $4.6 billion in credit was extended to Ukraine from the previous rescue package, which, combined with the new program, brings the total assistance from the I.M.F. to more than $22 billion.