Tuesday, August 12, 2014

Ukraine’s Currency Collapse May Swell Emergency Bailout Needs

Ukraine’s plummeting currency, the hryvnia, and deteriorating growth outlook could balloon the embattled country’s emergency bailout costs by nearly $10 billion, reports WSJ.

The International Monetary Fund approved a $17 billion bailout of Ukraine in late April, part of a $30 billion international emergency loan to keep the country’s economy from collapsing.

The IMF has had to revise its assumptions since April as an intensifying war against Russian-backed separatists in the east, a major manufacturing region, changed the country’s growth outlook and fueled state spending for the military campaign.

“With no quick solution to the conflict in the East in sight, even the revised program looks likely to be out of reach,” said two economists at the Institute of International Finance in a new report on the crisis.

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