IMF approves loanof $16.5bn to Ukraine

The International Monetary Fund has approved a $16.5bn loan programme for Ukraine to ease strains from the global financial crisis.

The IMF will immediately disburse $4.5bn to the government under the two-year loan agreement.

"The programme is designed to help stabilise the domestic financial system against a backdrop of global deleveraging and a domestic crisis of confidence, and to facilitate adjustment of the economy to a large terms-of-trade shock," the Fund said. "The authorities' plan incorporates monetary and exchange rate policy shifts, banking recapitalisation, and fiscal and incomes policy adjustments."

President Viktor Yushchenko, right, said the decision was a "signal to the international community to boost the rating of trust in our country".

The IMF forecast Ukraine would sink into recession next year, with a 3 per cent fall against 6 per cent growth this year. Its economy, especially its banking system, has been hit by a drop in global steel prices, its main export, and global financial turmoil.