Ukraine's former prime minister Yulia Tymoshenko said on Thursday she will run for president in next month’s election while, separately, the International Monetary Fund promised to loan between $14 billion US and $18 billion US to prop up the country’s teetering economy.

Tymoshenko, released from jail last month after her arch foe Viktor Yanukovych fled from power, pledged to build a strong army and said she hoped to be able to recover Crimea from Russia, which annexed it last week. 

The referendum that led to the annexation was declared illegal, also on Thursday, in a non-binding resolution by the UN General Assembly. 

The announcement by the flamboyant Tymoshenko set up a contest with former boxer Vitaly Klitschko, who has also declared his candidacy, and other figures who have emerged to contend for top posts after four months of political turmoil.

"I will be the candidate of Ukrainian unity," Tymoshenko said. "The west and centre of Ukraine has always voted for me, but I was born in the east, in Dnipropetrovsk."

She has previously said no other politicians understand the “depth of lawlessness” in Ukraine, or are as determined to end it.

Tymoshenko, 53, a powerful speaker known in her heyday for her trademark peasant hair braid, served twice as prime minister and ran for president in 2010, only to be narrowly beaten in a run-off vote by her nemesis Yanukovych.

Yanukovych subsequently launched a campaign against her and her allies, and she was jailed in 2011 for abuse of office linked to a gas deal she brokered with Russia in 2009.

Obama Russia Analysis

Ukraine has started withdrawing its troops and weapons from Crimea, now controlled by Russia after it formally annexed the region. (Pavel Golovkin/The Associated Press)

She served two years of a seven-year term, mainly under prison guard in a hospital in Kharkiv, before being released when Yanukovych fled on Feb. 20 and was subsequently ousted by parliament.

She was wildly popular at the height of her power 10 years ago when she led tens of thousands on the streets of Kyiv against an earlier bid for power by Yanukovich in what became known as the Orange Revolution.

Tymoshenko said that she would not squander voters' trust this time around.

"I will do everything to ensure that our second European revolution does not lead to distrust, depression and disappointment," she said. "I will everyday work to earn the trust that is afforded to me by the people."

The Ukraine election is set for May 25.

'Reap the whirlwind' 

The non-binding resolution passed Thursday by the UN said the Moscow-backed resolution that paved the way for Russia's annexation of Crimea was illegal. 

There were 100 votes in favour, 11 opposed and 58 abstentions of the 193-member assembly. The resolution was put forth by Ukraine and co-sponsored by Canada. Western diplomats said the number of yes votes was higher than expected despite what they said was Moscow's aggressive lobbying efforts against the resolution.

Canada's ambassador to the UN, Guillermo Rishchynski, expressed hope the result will encourage Moscow to reverse course. 

"Territorial integrity is a fundamental principle of the UN charter, which we have all signed. It behooves the Russians to take it seriously," Rishchynski told CBC News. 

"It's their choice. They can decide what they want to do, and they will reap the whirlwind in terms of consequences," he added. 

Referring to a speech delivered earlier in the day by Prime Minister Stephen Harper, Rishchynski said "it will not be business as usual" with Russia until it starts to step back. 

In the U.S., the House and Senate passed legislation granting further assistance to Ukraine and imposing sanctions against Russia. The bill will provide $1 billion US in loan guarantees to Ukraine, and further assistance in areas including democratic governance and security. The bill is intended to be ready for approval by U.S. President Barack Obama by the end of Thursday. 

Separately, a group of senators is calling on Obama to signal further disapproval by cancelling the remainder of a $1-billion contract to buy helicopters from Russia. The eight Republicans and two Democrats also want Obama to impose sanctions banning any future U.S. business with Rosoboronexport, Russia's arms export agency.

Brink of bankruptcy

Ukraine's parliament on Thursday voted in favour of an anti-crisis law accepting austerity measures demanded by the IMF as part of its multi-billion-dollar bailout package.

Ukraine went through three months of anti-government protest before Yanukovych fled the country. Its economy teetering on collapse, the country was pushed closer to the edge with Russia's takeover of the Crimean Peninsula and Moscow's multi-billion dollar bill for gas deliveries.

Prime Minister Arseny Yatsenyuk told the parliament on Thursday that the country is "on the brink of the economic and financial bankruptcy" and that its economy could drop 10 per cent this year unless urgent steps are taken.

But the reforms his new government agreed to in exchange for the IMF loans will hit households hard. That could severely diminish the new government's popularity at a time when it is struggling to establish itself in Kyiv and has already lost territory to Russian forces.

The IMF said on Thursday that Ukraine's recent economic policies have drastically slowed growth and brought foreign currency reserves to a "critically low level."

After two weeks of talks in Kyiv, the IMF said the precise amount would be determined once Ukrainian authorities offered more precision on their needs and it was clear what other aid the country would receive. It mentioned, however, that the "support from the broader international community" could be as high as $27 billion.

U.S. lawmakers are rushing to get a bill to the president's desk that would provide $1 billion in loan guarantees to Ukraine and sanction those who had a hand in Russia's takeover of Crimea.

The House and Senate were poised to pass versions of the legislation Thursday. Both sides said they want to get one bill to President Barack Obama's desk before the end of the week, but it was unclear whether the work would be finished by then.

The IMF loan hinges on structural reforms that Ukraine has pledged to undertake. The IMF said the reforms will include maintaining a flexible exchange rate and reforming the energy sector to make it profitable, all of them potentially painful for the majority of the population.

Russia is raising natural gas prices for Ukraine, and the households in Ukraine should expect their gas bills to rise by 50 per cent in May, Ukrainian officials said.

With files from CBC News, The Associated Press