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International Monetary Fund Managing Director Christine Lagarde at IMF Headquarters in Washington, April 30, 2014.
Cliff Owen—AP

A $17 billion aid program has been approved for cash-strapped Ukraine, as the Kiev government struggles to maintain control of restive eastern regions near the Russian border.

The two-year deal will see the International Monetary Fund (IMF) immediately plow in $3.2 billion needed to prevent the embattled government from defaulting on its debts, as the East European nation teeters on the brink of bankruptcy.

The loan will give Ukraine vital breathing space from international creditors and allow the nation to tackle a $2.2 billion debt owed to Moscow for natural gas. Russia has been threatening to turn off supplies, further exacerbating tensions.

“Today’s final approval for the $17 billion IMF program marks a crucial milestone for Ukraine,” U.S. Treasury Secretary Jack Lew said in a statement.

IMF chief Christine Lagarde said the organization would keep a close watch to ensure the Kiev government abides by the terms of the deal.

The loan also paves the way for Ukraine to receive an additional $15 billion in funding pledged by the World Bank, Japan, the E.U., Canada and the U.S.

On Monday, the Obama Administration leveled more sanctions against individuals and companies close to Russian President Vladimir Putin, as part of a “calibrated effort” to prevent the Kremlin fostering unrest in its southwestern neighbor.

And Lew warned on Wednesday that the U.S. would “impose increasing costs on Russia if it persists in its efforts to destabilize Ukraine.”

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