Following a year of turmoil in Ukraine that has stricken the economy and caused the hryvnia to fall dramatically by over 50 percent, the IMF has announced a new emergency bailout for the troubled state. The loan replaces the $17bn fund that was allocated last year to Ukraine, of which only $4.5bn was received.
Kiev must slash its budget and overhaul the banking system
The IMF’s renewed plan was announced soon after a ceasefire was agreed between Russia and Ukraine, which took an intense negotiation period lasting 17 hours to reach. The World Bank has also agreed to lend up to $2bn to aid the fragile economy which has been edging closer towards default.
In 2014, the Ukrainian state was faced with mass protests, the ousting of President Yanukovych, the Russian annexation of Crimea and an aggressive uprising that continues to stretch out from the eastern region; an unprecedented, chaotic year in the country’s history.
In accordance with the IMF’s conditions for the $17.5bn loan, Kiev must slash its budget and overhaul the banking system. The state is also obliged to make further headway in fighting corruption. Cutting spending on social services and benefits is likely to promote additional tension among the population, which is already rife with discord amidst the deepening fiscal crisis. As the Ukrainian people face further austerity, the insurgency in the east could successfully enhance its mobilisation efforts, thereby causing further social unrest; an antithetical by-product that may arise in the latest attempts to alleviate the country’s economic decline.
