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Ukraine set for $16.5bn IMF loan IMF aid for Ukraine and Hungary
(about 7 hours later)
The International Monetary Fund (IMF) is to offer a $16.5bn (£10.4bn) loan to Ukraine to help it "maintain confidence and economic and financial stability". The International Monetary Fund (IMF) is to offer a $16.5bn (£10.4bn) loan to Ukraine and has agreed an as yet undisclosed package with Hungary.
The country has been badly shaken by the global credit crunch, with stock markets and the Ukrainian currency tumbling and banks needing propping up. Ukraine is to receive the loan to help it "maintain confidence and economic and financial stability", the IMF said.
Internal political turmoil has also delayed economic development. The country has seen its stocks, banks and currency badly shaken by the global credit crunch.
The loan depends on Ukraine being able to balance its budget and make reforms to its banking sector. The "substantial financing package" for Hungary is due to be finalised in the next few days, the IMF said.
It is conditional upon Hungary adopting "strong policies" and will be drawn from the IMF, the EU, and some individual European governments "together with regional and other multilateral institutions", IMF Managing Director Dominique Strauss-Kahn said in a statement.
Hungary's currency, the forint, has seen a sharp fall, stocks have tumbled and the country has cut its growth forecast for 2009.
Currency plungeCurrency plunge
Last week the IMF said it was to give Iceland a £2.1bn loan as its banking system came close to collapse. Internal political turmoil has delayed economic development in Ukraine and the IMF loan depends on the ex-Soviet state being able to balance its budget and make reforms to its banking sector.
Hungary, Pakistan and Belarus are also in talks about accessing IMF funding. Last week, the IMF said it was to give Iceland a £2.1bn loan as its banking system came close to collapse.
"The authorities' program is intended to support Ukraine's return to economic and financial stability, by addressing financial sector liquidity and solvency problems, by smoothing the adjustment to large external shocks and by reducing inflation," said the IMF's managing director Dominique Strauss-Kahn. Pakistan and Belarus are also in talks about accessing IMF funding.
"The authorities' programme is intended to support Ukraine's return to economic and financial stability, by addressing financial sector liquidity and solvency problems, by smoothing the adjustment to large external shocks and by reducing inflation," said Mr Strauss-Kahn.
"At the same time, it will guard against a deep output decline by insulating household and corporations to the extent possible.""At the same time, it will guard against a deep output decline by insulating household and corporations to the extent possible."
Easy credit and a property boom had seen Ukraine's capital Kiev expand rapidly. Easy credit and a property boom have seen Ukraine's capital Kiev expand rapidly but the global downturn has seen investors and those willing to offer loans withdraw.
But the global downturn has seen investors and those willing to offer loans withdraw. Ukraine also relies heavily on steel, but prices have collapsed and its currency, the hryvnia, has fallen sharply in the past two weeks.
Ukraine also relies heavily on steel, but prices have collapsed.
And its currency, the hryvnia, has fallen sharply in the past two weeks.