IMF Bails Out Hungary, Ukraine

Multibillion-dollar loans prop up Eastern Europe's basket cases
By Jason Farago,  Newser Staff
Posted Oct 27, 2008 8:47 AM CDT
Yulia Tymoshenko, the prime minister of Ukraine. The IMF has announced it will loans tens of billions of dollars to Ukraine and Hungary, the latest national victims of the credit crisis.   (AP Photo/Olexander Prokopenko, Pool)
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(Newser) – The IMF will provide multibillion-dollar loans to Ukraine and Hungary, which have followed Iceland to become the latest national victims of the global financial crisis. Ukraine will receive a $16.5 billion loan, while the specifics of the Hungary deal are still being worked out. Both Eastern European countries have seen their currencies devalued and their stock markets plunge in recent weeks.

Governments consider loans from the IMF as a last resort, as the bank attaches strict conditions on spending to encourage economic stability. But the loans became inevitable as Ukraine saw its stock market drop 70%, while the Hungarian central bank had to push through a massive 3% interest rate hike to prop up its currency, the forint. One economist told Bloomberg that the strings attached are as important as the cash: "The money is only half of the issue, conditionality is key."