This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.nytimes.com/2015/02/13/world/europe/imf-approves-17-5-billion-bailout-for-ukraine.html
The article has changed 8 times. There is an RSS feed of changes available.
| Version 5 | Version 6 |
|---|---|
| I.M.F. Announces $17.5 Billion Package to Help Kiev Stabilize Economy | |
| (about 1 hour later) | |
| MOSCOW — 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. | MOSCOW — 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. | 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. | 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. | 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. | “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. | 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.” | “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.” | 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. | 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. | 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. |
| Even that will not be enough, most experts agree. | Even that will not be enough, most experts agree. |
| Officials with the I.M.F. have been working to identify how much help Ukraine will need and where that assistance can come from. | Officials with the I.M.F. have been working to identify how much help Ukraine will need and where that assistance can come from. |
| The European Union late last month agreed to provide $2 billion in loans to Ukraine, while the United States has pledged $2 billion in loan guarantees, on the condition that the Ukrainian government remain committed to an ambitious overhaul program that many officials in Kiev acknowledge has been slow to take shape. | The European Union late last month agreed to provide $2 billion in loans to Ukraine, while the United States has pledged $2 billion in loan guarantees, on the condition that the Ukrainian government remain committed to an ambitious overhaul program that many officials in Kiev acknowledge has been slow to take shape. |
| While the fund had demanded that Ukraine begin major changes and undertake some tough austerity measures in exchange for last April’s rescue, the country’s economic problems have outpaced the prescriptions. | While the fund had demanded that Ukraine begin major changes and undertake some tough austerity measures in exchange for last April’s rescue, the country’s economic problems have outpaced the prescriptions. |
| For instance, at the fund’s insistence, Ukraine last spring raised the tariffs paid by regular households for natural gas by 50 percent, a painful and unpopular increase but one intended to begin rolling back heavy government energy subsidies that have long contributed to the country’s economic woes. | For instance, at the fund’s insistence, Ukraine last spring raised the tariffs paid by regular households for natural gas by 50 percent, a painful and unpopular increase but one intended to begin rolling back heavy government energy subsidies that have long contributed to the country’s economic woes. |
| In the months after the tariff increase, however, the value of the hryvnia collapsed by nearly the same amount, wiping out any additional revenue for the state-owned gas company, Naftogaz, which bills its customers in the local currency but pays its suppliers, including Russia, in dollars. | In the months after the tariff increase, however, the value of the hryvnia collapsed by nearly the same amount, wiping out any additional revenue for the state-owned gas company, Naftogaz, which bills its customers in the local currency but pays its suppliers, including Russia, in dollars. |
| Western officials have repeatedly expressed confidence that the government in Kiev is committed to change, and Ms. Lagarde repeated that optimism on Thursday. | Western officials have repeatedly expressed confidence that the government in Kiev is committed to change, and Ms. Lagarde repeated that optimism on Thursday. |
| Ms. Lagarde cited fiscal discipline that limited the decline in the country’s annual economic output last year to a better-than-expected 4.6 percent, the increase in household gas prices and new anticorruption programs as promising steps. | Ms. Lagarde cited fiscal discipline that limited the decline in the country’s annual economic output last year to a better-than-expected 4.6 percent, the increase in household gas prices and new anticorruption programs as promising steps. |
| Prime Minister Arseniy P. Yatsenyuk of Ukraine issued a statement saying that the government was committed to making the improvements, not to meet the demands of creditors, but for the benefit of the country. | Prime Minister Arseniy P. Yatsenyuk of Ukraine issued a statement saying that the government was committed to making the improvements, not to meet the demands of creditors, but for the benefit of the country. |
| “The program is aimed to restore economic growth,” Mr. Yatsenyuk said of the help from the fund. He added, “We believe that 2016 will become for Ukraine a year of stabilization and economic growth.” | “The program is aimed to restore economic growth,” Mr. Yatsenyuk said of the help from the fund. He added, “We believe that 2016 will become for Ukraine a year of stabilization and economic growth.” |
| Under the new aid program, called an extended fund facility, Ukraine will receive the maximum allowable four years of assistance. | Under the new aid program, called an extended fund facility, Ukraine will receive the maximum allowable four years of assistance. |
| It will also have more time to repay the loans, up to 10 years, compared to a maximum of five years under the prior program. | It will also have more time to repay the loans, up to 10 years, compared to a maximum of five years under the prior program. |
| Ukraine is now expected to enter into tough negotiations with its existing debt holders seeking to reduce its huge borrowing costs. | Ukraine is now expected to enter into tough negotiations with its existing debt holders seeking to reduce its huge borrowing costs. |
| Such savings, along with other assistance, is expected to bring the total financing package for Ukraine to more than $40 billion over the next four years, Ms. Lagarde said. | Such savings, along with other assistance, is expected to bring the total financing package for Ukraine to more than $40 billion over the next four years, Ms. Lagarde said. |
| Among the challenges is that Russia is among those creditors, and a dispute seems to be looming over a $3 billion loan that was provided to Ukraine just before Mr. Yanukovych, the former president, fled. | Among the challenges is that Russia is among those creditors, and a dispute seems to be looming over a $3 billion loan that was provided to Ukraine just before Mr. Yanukovych, the former president, fled. |
| Russia can demand to renegotiate terms of the loan if Ukraine’s external debt exceeds 60 percent of its gross domestic product, a threshold that the country may have already crossed. | Russia can demand to renegotiate terms of the loan if Ukraine’s external debt exceeds 60 percent of its gross domestic product, a threshold that the country may have already crossed. |