MOSCOW — The International Monetary Fund agreed on Thursday to throw a new $17.5 billion lifeline to Ukraine, hoping to stabilize the country as it teeters on the edge of default.
The new plan replaces a $17 billion emergency bailout that was extended last year after mass street protests in Ukraine ousted the country’s president, Viktor F. Yanukovych; Russia invaded and annexed Crimea; and a violent separatist uprising began in the east of the country. That uprising has now stretched into a nearly yearlong war that has severely crippled Ukraine’s economy.
In addition to the heavy costs of the continuing military operation and the displacement of more than one million people from the east, Ukraine has had to grapple with a collapse in the value of its currency, the hryvnia, and spiking inflation. Trade with Russia, long Ukraine’s largest partner, has plummeted, paralyzing many industries. Foreign investment has dried up amid the turmoil.
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“The government is committed to front-loaded measures under the new program — including further sizable energy tariff increases; bank restructuring; governance reforms of state-owned enterprises; and legal changes to implement the anticorruption and judicial reform agenda,” Ms. Lagarde said.
She said that the government would also enter negotiations with its sovereign debt holders to reduce its huge borrowing costs, and that, along with other assistance, the total financing package for Ukraine would amount to about $40 billion over the next four years. The new $17.5 billion program must still be approved by the fund’s board, but that is largely viewed as a formality.
