The International Monetary Fund (IMF) says its executive board has approved an 18-month, $5 billion standby arrangement for Ukraine aimed at helping the country cope with the COVID-19 pandemic.
The approval means Ukraine can receive an immediate disbursement of about $2 billion, with the remaining amount disbursed in phases over four reviews during the 18-month period, the IMF said in a statement.
The amount is $200 million more than originally planned, Ukrainian President Volodymyr Zelenskiy said on Twitter.
"The new program funding will help us to overcome the challenges caused by #COVID19. The #IMF has proven itself to be a reliable partner to a friend in need," Zelenskiy said.
The deal provides balance-of-payments and budget support, while safeguarding the country's achievements to date and advancing a small set of key structural reforms, the IMF said.
Zelenskiy's government has touted the agreement as a vote of confidence in its ability to deliver reforms, including a banking law that prevents the former owners of insolvent banks from regaining their assets.
Securing the IMF funds is also expected to unlock financing from the European Union and other institutions for the country, which is not financially powerful enough to pass major stimulus measures to keep its economy afloat amid measures put in place in March to prevent the spread of the coronavirus.
Though the measures are being gradually lifted, the economic damage has been done. Ukraine's economy is projected to contract by about 5 percent this year.
IMF Managing Director Kristalina Georgieva said the new arrangement, which succeeds one approved in December 2018 focused on maintaining stability during the election year, will provide an "anchor" for the authorities' efforts to address the impact of the coronavirus crisis.
"The outbreak of the COVID-19 pandemic has significantly worsened the outlook and has refocused government policies on containment and stabilization," the IMF said. "Uncertainty is large, and the economy is projected to contract sharply in 2020 as strict containment measures -- in Ukraine and globally -- led to sizable falls in domestic and external demand."
The country's 2020 budget is expected to be hit hard, with a sharp decline in revenues and large emergency spending, the IMF said.
Two of the main policies the new arrangement will focus on are mitigating the economic impact of the crisis by supporting households and businesses among other measures and ensuring continued central-bank independence and a flexible exchange rate.
Georgieva said sound monetary policies since the 2014–15 crisis have resulted in a sharp reduction in Ukraine's external and internal imbalances. While Ukraine's track record in stabilizing its economy since then has been strong, more reforms efforts are needed to ensure robust and inclusive growth, the statement said.
The current humanitarian and economic crisis has refocused policy priorities away from deep structural reforms, she said, adding that efforts aimed at tackling corruption and strengthening governance will be critical to ensure macroeconomic stability and achieve sustainable and inclusive growth.
The country has recorded more than 28,000 confirmed coronavirus cases, with 818 deaths, according to a tally by Johns Hopkins University.