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IMF approves $17.5 billion loan program for Ukraine


    WASHINGTON (Reuters) - The International Monetary Fund's board signed off on a $17.5 billion (11. 7 billion pounds) four-year aid program for Ukraine on Wednesday, the second attempt in less than a year to pull its economy back from the brink of bankruptcy.

    A statement from IMF Managing director Christine Lagarde did not provide details on how large an initial payment will be made to Ukraine or on what timetable.

    The IMF loan is expected to unlock further credits from other donors. Including the expected fruits of debt restructuring talks with Kiev's existing bondholders, the total package of assistance for the country should be $40 billion, the IMF has said.

    "This new four-year extended arrangement will support immediate economic stabilization in Ukraine," Lagarde said, adding that the assistance is needed because of the country's "protracted" economic problems.

    The IMF last year already approved a $17 billion loan to Kiev over two years. But the IMF deemed insufficient the funds and agreed program duration to support Ukraine's economic reforms while the government continued to battle pro-Russia separatists in eastern Ukraine.

    Pro-Russian rebels and the government agreed to a peace deal in Minsk last month, but both sides continue to accuse each other of violations.

    The unrest in the east follows months of upheaval from anti-government protests and Russia's subsequent annexation of the Crimea region.

    Lagarde last week said an infusion of financial support for Ukraine and its success largely hinges on the stability of eastern Ukraine and how the security crisis is resolved.

    After a year of political upheaval and war, Ukraine's economy is in a tailspin with a currency that just pulled back from record lows, the highest interest rates in 15 years, and central bank reserves of just $6.4 billion, barely enough to cover five weeks of imports.

    Ukraine's parliament last week approved a raft of IMF-backed amendments to its 2015 draft budget which were key preconditions for IMF approval of the bailout.

    The fund complimented those steps, including the willingness of Ukraine officials to let the currency float.

    "They have maintained fiscal discipline in very difficult conditions," Lagarde said in a release.

    (Reporting by Anna Yukhananov and Howard Schneider; Editing by Chizu Nomiyama and Christian Plumb)