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IMF approves $1.4 billion in new funds for Ukraine

The International Monetary Fund approved Friday the release of nearly $1.4 billion in fresh funds for troubled Ukraine, as the country faces an escalation in fighting with pro-Russia separatists.

It was the second release of funds from the IMF’s program to help stabilize the economy and its currency, the hryvnia, battered by years of mismanagement and more recently by the troubles with rebels in Crimea and the country’s east.

Ukraine’s economy has contracted for nearly two years and continued to shrink in the April-June quarter amid continued political instability, the takeover of Crimea by Russia and the ongoing insurgency.

In April the IMF approved a $17 billion line of credit to Ukraine, part of a $27 billion international rescue of the economy, but the first releases of funds have yet to stabilize the hryvnia.

The currency, which traded at just over eight-to-one US dollar late last year, fell to almost 14 this week.

The IMF has warned the economy could contract 6.5 percent this year, and in July IMF chief Christine Lagarde said the support marshaled by the international community might not be adequate to shore up Kiev’s finances.

Prime Minister Arseniy Yatsenyuk via Twitter welcomed the new funds Friday as “a welcome sign of support and confidence.”

Earlier he called the economic situation “very difficult and very complicated, (as) the country is at war.”