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Obama administration unveils $1-billion loan package for Ukraine

UkraineFinanceBusinessPoliticsJack LewInternational Monetary Fund

WASHINGTON – The Obama administration will ask Congress to approve $1 billion in loan guarantees and other assistance to help stabilize the new, pro-Western government in Ukraine, Treasury Secretary Jacob Lew said Tuesday.

The loans will be part of a larger international aid package coordinated by the U.S. and European allies, and distributed largely through the International Monetary Fund. The money is needed to close a gaping budget hole left when the Ukraine opposition deposed President Viktor Yanukovich and rejected a loan package from Moscow. Experts say the new government needs roughly $20 billion to fill the gap in the current fiscal year.

In a statement released Tuesday, Lew said the U.S. and its partners will work to  “provide as much support as Ukraine needs to restore financial stability and return to economic growth, if the new government implements the necessary reforms.” Obama on Monday said a speedy approval of the deal would send a strong message to Russia, which the U.S. has accused of breaching international law by seizing control of Ukraine's Crimean peninsula in the wake of the coup.

PHOTOS: Crisis in Ukraine

The first phase of support will be $1 billion in a package of loan guarantees, which will go toward “protecting vulnerable Ukrainian households from the impact of the needed economic adjustment,” Lew said.  Both Republicans and Democrats in Congress have expressed support for the loans, which would require only $200 million of initial investment, according to congressional sources.

The proposed package will also include advice and consulting from other U.S. agencies to help the new government conduct elections, develop strong media and other civil institutions, fight corruption and recover stolen assets, the White House said in a fact sheet released Tuesday morning.

The White House also said it hopes to build support for additional funding for the IMF, something Republicans in the House have opposed. Lew said that the backing would help the fund “lend additional resources to Ukraine, while also helping to preserve continued U.S. leadership within this important institution.”

kathleen.hennessey@latimes.com

Twitter: @khennessey

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