The International Monetary Fund has announced emergency funding between $14 billion and $18 billion to help Ukraine avoid defaulting on its debt payments.The assistance comes as Ukraine stares into an economic abyss.
Prime Minister Arseny Yatsenyuk announced in parliament Mar. 27 that Ukraine is “on the brink of the economic and financial bankruptcy” and that the country’s economy might plummet 10 per cent in the coming months unless drastic measures are taken.
While the cash is critical to stabilizing the rocky economic situation in the country, it comes with serious strings attached. Included in the terms is a 50 per cent rise in the cost of energy for Ukrainian homeowners.
The overall aid package is close to $27 billion and will be used to help the country navigate rough economic waters over the next two years as it attempts to right itself after a political storm that continues to punish Ukraine’s financial stability.
The IMF loan requires Ukraine to implement structural reforms that include an overhaul of the country’s energy industry to make it profitable, and programs to maintain a flexible foreign exchange rate.
The terms promise to be punishing for Ukraine’s residents.
Ukraine buys its natural gas from Russia which is hiking prices. Ukrainian officials said people should expect their gas bills to rise by 50 per cent beginning in May.