Ukraine Rescue

A Bailout at Any Price

Ukraine brken AFP
Destruction is widespread in East Ukraine.
  • Why it matters

    Why it matters

    With its economy severely damaged by the conflict in the east, Ukraine needs more than the aid money currently planned to avoid bankruptcy.

  • Facts

    Facts

    • The International Monetary Fund can only provide aid to countries which are able to repay it.
    • The IMF announced a preliminary agreement for a new $17.5 billion, four-year loan program for Ukraine last month.
    • The direct and guaranteed debt of Ukraine to Russia and Russian banks amounted to $4.728 billion dollars, or 12.2 percent of Ukraine’s total external debt at the beginning of 2015.
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  • Audio

    Audio

  • Pdf

On Wednesday a meeting of the board of the International Monetary Fund, or IMF, will agree to provide Ukraine with a new $17.5 billion bailout package.

However, IMF head Christiane Lagarde says the country needs a much heftier lifeline of around $40 billion.

This would entail the country’s creditors agreeing to a debt haircut for Ukraine as the aid package alone won’t be enough. Its economy has been severely damaged due to the ongoing war in the east of the country between pro-Russian separatists and Ukrainian soldiers.

The IMF plans to provide $15 billion to the aid fund. According to information obtained by Handelsblatt, the plan also envisages the government in Kiev reaching a deal with its creditors over the coming three months. Through debt restructuring and loans from governments and organizations like the World Bank, this would make up the full $40 billion required.

“It is an ambitious program; it is a tough program; and it is not without risk,” Ms. Lagarde said last month.

While observers expect the crisis in eastern Ukraine to ease, it is unclear whether the ceasefire reached last month will continue between pro-Russian fighters and Ukrainian troops.

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