IMF approves 16.4 bln dollar aid for Ukraine | world | Hindustan Times
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IMF approves 16.4 bln dollar aid for Ukraine

world Updated: Nov 06, 2008 09:31 IST

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The International Monetary Fund approved a 16.4 billion dollar loan aimed at rescuing Ukraine from a deepening financial crisis, officials said.

The IMF said it hoped the two-year agreement for Ukraine would curb inflation to single digits and shore up banks that are suffering in concert with the global credit crunch.

"The Ukrainian economy, especially the banking system, is experiencing considerable stress," said IMF deputy managing director Murilo Portugal in a statement on Wednesday.

"Falling prices for Ukraine's major export, steel, have led to a substantial deterioration in Ukraine's current account outlook."

The IMF approval, made under its "fast-track emergency financing mechanism," means that 4.5 billion dollars will be immediately disbursed, Portugal said.

Some banks have reportedly frozen customers' accounts while untold numbers of Ukrainians have rushed to withdraw their cash, fearing the worst as job losses spread.

The banking sector has been hit hard due to its increased exposure to foreign loans since the Orange Revolution protests of 2004 brought to power a pro-Western leadership and economic reformers pressed for more European integration.

Portugal said the government plan and the IMF loan "aims to restore financial and macroeconomic stability by adopting a flexible exchange rate regime with targeted intervention."

On Friday, Ukraine's parliament approved legislation clearing the way for the IMF loan, and establishing a stabilization fund to help ailing banks and companies unable to service their foreign debts due to the worldwide financial crisis.