U.S. Guarantees More Ukraine Loans

The United States said on Friday it had signed a major new loan guarantee with Ukraine aimed at helping the war-scarred former Soviet republic stabilize its floundering economy.

The $1-billion (900-million-euro) commitment is the third of its kind issued by Washington since a pro-EU revolution brought down Ukraine's Russia-backed president in February 2014.

The pledge is to provide Ukraine with more affordable access to international capital markets and fill its gaping budget hole.

"The guarantee sends a strong signal of the United States' continued support for Ukraine as it pursues reforms that fulfill the Ukrainian people's aspirations for a prosperous and democratic future," US Ambassador Geoffrey Pyatt said in a statement.

The new US assistance is part of a $40-billion global rescue package agreed by Ukraine and the International Monetary Fund in March 2015.

About $17.5 billion of that money is a loan from the Fund. The rest includes a loan restructuring program approved by Ukraine's private Western creditors and assistance from individual governments and international institutions.

The IMF had been frustrated by the slow adoption of painful belt-tightening measures that were resisted by populist parties and helped weaken leaders who rose to power after Ukraine's 2014 turn toward the West.

Allegations of government corruption led to the resignation of prime minister Arseniy Yatsenyuk and his replacement by pro-Western parliament speaker Volodymyr Groysman in April.

Ukraine has so far only received $6.7 billion in IMF disbursements and none since August 2015.

But the sides last month reached a staff-level agreement to resume the program after parliament adopted a raft of austerity measures prescribed by the IMF.

That progress allowed Kiev's other partners to resume their own lending and help Ukraine shed the dysfunctional economic legacy of its Soviet past.

Kiev hopes to receive $1.6 billion in fresh funds from the IMF by July.

The east European nation's economy contracted by 9.9 percent last year but appears to be on course to achieve modest growth in 2016.

Ukraine reported a 0.1 percent expansion of gross domestic product (GDP) between January and March compared to the same period in 2015.

This marked the first quarter of annualized growth since the end of 2013.