RIGA -- The European Union and Ukraine have signed a 1.8 billion-euro ($2 billion) loan deal to help revive Ukraine's ailing economy.
Officials signed the agreement on May 22 at a summit of leaders of EU states and six countries identified as the EU's eastern partners: Georgia, Moldova, Ukraine, Belarus, Armenia, and Azerbaijan.
The Associated Press reports the agreement, part of the EU's Macro-Financial Assistance (MFA) program, would require Ukraine to adopt a series of reforms, including anticorruption measures, to remedy structural problems in its economy. The agreement brings the total amount of EU assistance to Ukraine in the past two years to about 6 billion euros.
Ukrainian Finance Minister Natalie Jaresko told journalists that the EU support was "critical" to her country.
"This third macro-financial assistance package is the largest to date...and a testament to the EU's belief that Ukraine can and will steer through this challenging period and progress along our path of reform and transformation," she said.
Ukraine's economy contracted by nearly 18 percent in the first quarter of 2015 from a year earlier as the country struggled with a falling currency, rising interest rates, and the impact on investor confidence of a yearlong conflict in the east of the country with Russian-backed separatists.
The economic woes have called into question Ukraine's ability to repay and restructure $23 billion worth of foreign debt.
This week, Ukraine's parliament approved a law that effectively gives the government the right to miss payments to its international creditors as it renegotiates payment terms.
That move immediately prompted a reaction from Russia, which holds a $3 billion Ukrainian eurobond whose full repayment is due by the end of the year.
Russia has demanded Ukraine repay all debts on time and accused Kyiv of effectively setting the stage for a default with the new law.
In addition to the EU funding, Ukraine hopes to secure the next tranche of a $17.5 billion bailout program with the IMF this summer to shore up its foreign-currency reserves.
Also at the Riga summit, the EU promised grants of 200 million euros ($223 million) to support small and medium-sized businesses in Ukraine, Georgia, and Moldova.