The International Monetary Fund and conflict-torn Ukraine have reached a preliminary deal on a new financial rescue plan worth $17.5 billion dollars that could be a "turning point" for Kiev, Christine Lagarde said Thursday.
Talks have been underway in Kiev for days to reach an agreement on Ukraine's fourth IMF bailout in ten years, with the last package in April 2014 failing to stabilise Kiev's finances as it battles pro-Russian separatists in the east.
"I am pleased to announce that the IMF team working in Kiev has concluded a staff-level agreement with the Ukrainian government on a new economic reform programme that would be supported by an extended fund facility of about $17.5 billion (15.5 billion euros) from the IMF," Lagarde told a news conference in Brussels.
The announcement came as Ukraine's President Petro Poroshenko was holding marathon peace talks in Minsk with his Russian counterpart Vladimir Putin, German Chancellor Angela Merkel and French President Francois Hollande.
Lagarde said the new arrangement would support "bold policy reforms" by Kiev, which is under pressure from Western governments and creditors to cut corruption and overhaul its finances, even as it battles the rebels.
"It is an ambitious program; it is a tough program; and it is not without risk," Lagarde said.
"But it is also a realistic program and its effective implementation, after consideration and approval by our executive board, can represent a turning point for Ukraine."