(Adds Kiev parliament passes anti-crisis law, U.N. vote)
* IMF demands tough reforms in return for aid
* Russia says economic growth could fall sharply
* Tymoshenko says she will run for president
By Natalia Zinets and Elizabeth Piper
KIEV/MOSCOW, March 27 Ukraine won a $27-billion
international financial lifeline on Thursday, rushed through in
the wake of Russia's annexation of Crimea, while Moscow's
economy minister acknowledged that his country's growth would
slow dramatically as funds flee abroad.
The International Monetary Fund announced a $14-18 billion
standby credit for Kiev in return for tough economic reforms
that will unlock further aid from the European Union, the United
States and other lenders over two years, effectively pulling
Kiev closer to Europe.
Raising the political temperature, former prime minister
Yulia Tymoshenko, released from jail last month after her
arch-rival Viktor Yanukovich fled from power in Kiev, announced
she would run again for president in an election on May 25.
The declaration by the flamboyant Tymoshenko, 53, set up a
contest with boxer-turned-politician Vitaly Klitschko, who has
also announced his candidacy, and other figures who have emerged
to contend for top posts after four months of political turmoil.
Tymoshenko, who appeared without the blond peasant hair
braid that has been her trademark for years, pledged to fight
"lawlessness" and said she hoped to recover Crimea. But she
remains behind her two rivals in opinion polls.
The IMF deal was a boost for the pro-Western government that
replaced the Russian-backed Yanukovich last month, prompting
Moscow to seize Crimea.
"The financial support from the broader international
community that the programme will unlock amounts to $27 billion
over the next two years," an IMF statement said.
The IMF said it did not see a need to restructure Ukraine's
debts for now.
The Ukrainian parliament later backed a law accepting the
austerity measures demanded by the IMF, after initially voting
"The decision we have to take is extremely unpopular,"
far-right nationalist leader Oleh Tyaynibok told parliament.
"But if this decision is not taken then (President Vladimir)
Putin in Moscow will applaud that the coalition has been split."
President Barack Obama said the IMF agreement was a major
step forward that would help stabilise Ukraine's economy.
China, which failed to back its ally Russia in a vote on
Crimea at the United Nations this month, said it would play a
"constructive role" on aid for Ukraine, but stopped short of
saying whether it would participate directly.
The European Bank for Reconstruction and Development could
direct up to a billion euros a year into Ukraine over the next
few years, while the EU could provide 850 million euros within
The Ukraine crisis has triggered the most serious East-West
confrontation since the end of the Cold War a quarter of a
century ago, deepening the slump in Ukraine's economy, centred
on coal and steel production, gas transit and grain exports.
Without IMF-mandated austerity measures, the economy could
contract by up to 10 percent this year, Prime Minister Arseny
Yatseniuk told parliament, explaining why his government had
bowed to the Fund's conditions.
"Ukraine is on the edge of economic and financial
bankruptcy," he said.
Kiev opened the way for the IMF deal by announcing on
Wednesday a radical 50-percent hike in the price of domestic gas
from May 1 and promising to phase out remaining energy subsidies
by 2016, an unpopular step Yanukovich had refused to take.
The prime minister, who took on the job a month ago saying
his government was on a "kamikaze" mission to take painful
decisions, said the price of Russian gas on which the nation
depends may rise 79 percent - a recipe for popular discontent.
The IMF statement said a key element of the programme would
focus on cleaning up Ukraine's opaque energy giant Naftogaz,
which imports gas from Russia's Gazprom. Naftogaz's
chief executive was arrested last week in a corruption probe.
The IMF also wants the national currency, the hryvnia, to
float more freely against the dollar, and a more stringent
The international rescue for Ukraine was in sharp contrast
to Western measures to isolate Russia diplomatically and charge
it an economic price for the annexation of Crimea, home to
Moscow's Black Sea fleet and an ethnic Russian majority.
Further isolating Moscow in the eyes of the West, the United
Nations General Assembly passed a non-binding resolution
declaring invalid Crimea's Moscow-backed referendum earlier this
month on seceding from Ukraine.
In Washington, the U.S. Senate and House of Representatives
easily passed bills to provide aid to Ukraine, back a $1 billion
loan guarantee for the Kiev government and impose sanctions on
Russians and Ukrainians over Russia's annexation of Crimea.
The United States also announced a ban on licences for the
export of defence items and services to Russia.
Targeted U.S. and EU visa bans and asset freezes against
senior Russian and Crimean officials, with the threat of tougher
economic sanctions to come if Putin goes any further, have
accelerated capital flight from Russia.
Russian Economy Minister Alexei Ulyukayev said on Thursday
capital outflow could be around $100 billion this year, and
would slow economic growth to well below earlier forecasts of
2.5 percent this year.
"If we assume in the first quarter capital outflow was $60
billion ... then (it) will reach around $100 billion for the
whole year," Ulyukayev told an investment conference.
"Under this scenario, we estimate that economic growth will
slow down to 0.6 percent."
The World Bank gave a gloomier forecast, saying that in a
high-risk scenario of persistent tension over Ukraine, Russia's
economy could shrink by up to 1.8 percent, even without Western
Ukraine's dollar bonds jumped on news of the IMF bailout and
the cost of insuring its debt against default fell sharply.
Russian stocks fell on economic pessimism there.
In a sign of growing concern about the impact of potential
sanctions, the head of Russia's state nuclear corporation,
Rosatom, said nuclear industry contracts with other countries
could be affected by Western measures.
After Visa and MasterCard stopped providing
services for payment transactions for clients at Bank Rossiya,
which is under U.S. sanctions, Putin said on Thursday that
Russia would develop its own credit card system.
(Additional reporting by Pavel Polityuk in Kiev and Lidia Kelly
and Jason Bush in Moscow; Writing by Paul Taylor and Giles
Elgood; Editing by Alastair Macdonald)