'Ukraine crisis may have severe impact'

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Christine Lagarde1

Berlin - International Monetary Fund chief Christine Lagarde warned in a German newspaper interview Monday that the Ukraine crisis could have “severe” economic consequences for other countries.

Lagarde also told the Handelsblatt business daily that a 17-billion-dollar aid package granted to Ukraine by the IMF would not be enough.

“The crisis in Ukraine is a danger which is very difficult to gauge (and) whose contagion risk for other countries can barely be predicted,” she said.

“All the same, it can have severe economic consequences.”

Lagarde will meet German Chancellor Angela Merkel in Berlin on Tuesday for annual talks, alongside the heads of the OECD, World Bank, World Trade Organisation and International Labour Organisation, on the global economic situation.

Asked where the biggest dangers lay, the IMF chief pointed to the turmoil in Ukraine having an impact on international trade, foreign direct investment, international capital flows and Europe's energy supply.

“Ukraine needs much more than 17 billion dollars. For example, bilateral help from abroad and financial help from other international financial institutions,” Lagarde said, adding that the international community had no choice.

“We can't simply say the situation is too precarious, therefore we're not giving money at the moment.”

Pro-Russian rebels have claimed voters in two eastern Ukrainian regions massively backed independence in a disputed poll Sunday, as Ukraine gears up for presidential elections on May 25 after protests in February forced out pro-Moscow president Viktor Yanukovych. - Sapa-AFP

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