Ukraine to get $18 billion rescue from IMF

Ukraine will receive as much as $18 billion in aid from the International Monetary Fund. The country was on the brink of bankruptcy.

LONDON (CNNMoney)

Kiev has been running dangerously low on cash to pay for imports and service its debts since the ousting of pro-Moscow former President Vitkor Yanukovych last month, which killed off a $15 billion financial lifeline from Russia.

The IMF said it had reached preliminary agreement with Ukraine on a program of reforms aimed at stabilizing the economy and creating the conditions for a return to sustained growth.

Related: Soros: Ukraine needs EU Marshall Plan

Central to the program are commitments by Ukraine to tackle corruption -- a major concern of international donors -- and reforming the country's energy market, including the gradual withdrawal of subsidies on natural gas.

"Importantly, this will be accompanied by scaled up social protection to mitigate the impact on the most vulnerable," the IMF said in a statement.

Related: Recession warning for Russia

With its foreign currency reserves shrinking rapidly and economic turmoil rising following Russia's annexation of Crimea, Ukraine was staring bankruptcy in the face.

Analysts estimate it needs $12-13 billion this year alone to pay for imports and service debt -- including a $1 billion bond falling due in June -- and arrears on Russian gas imports.

The EU has already offered Ukraine financial assistance worth $15 billion over the next two years, in the form of loans, grants, investments and trade concessions. The U.S. has promised $1 billion in loan guarantees, and the World Bank is talking about backing infrastructure and social security projects worth $3 billion.

First Published: March 27, 2014: 5:10 AM ET

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