The International Monetary Fund board has approved a two-year, $17 billion loan package for Ukraine, hinging on country-wide economic reforms. The changes included raising taxes, freezing the minimum wage and raising energy prices — all steps that could hit households hard and strain the interim government’s tenuous hold on power.
The Wall Street Journal reports that although the packed was whipped together in a mere matter of weeks, there are conflicting interests at work. For the West, the package shows support for the new government. For Russia, it ensures financial stability for one of its most important trade partners.
This approval follows the March move by the IMF that slashed Russia’s economic outlook for 2014 — citing fears by investors over the situation in Ukraine. The bank estimates Russia’s output will only grow by 0.2 percent this year, a fourth downward revision from an original estimate of 3 percent for the year.