IMF approves $17 billion aid for Ukraine

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The International Monetary Fund has approved a $17 billion aid deal for Ukraine, even as Kiev fights to prevent pro-Moscow separatists from hiving off another chunk of the country.

The IMF executive board's green light yesterday opens the way for an immediate deployment of $3.2 billion to Kiev, which faces deep fiscal problems, compounding its political crisis.

Part of a $27 billion bailout including the World Bank, European Union and others, the IMF said the rescue plan "aims to restore macroeconomic stability, strengthen economic governance and transparency, and launch sound and sustainable economic growth, while protecting the most vulnerable."

The Fund has warned though that the Ukraine economy faces a 5.0% contraction this year, even with the two-year loan program.

Some of the initial disbursements could be turned around to pay off an outstanding $2.2 billion bill for natural gas from Russia, which has threatened to cut off fuel supplies to its former Soviet republic.

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