EU, USA and IMF Will Help Ukraine on Condition of Reforms

2014/02/05 • News

Ukrainian national symbols at the European Parliament

EU, US and IMF are considering a package of financial aid for Ukraine but only on condition that Kyiv implements far-reaching political reforms. “We are looking at how to support Ukraine in today’s economic and political situation,” said Maja Kocijancic, a spokeswoman for EU foreign policy chief Catherine Ashton.

Ashton who returns to Ukraine this wee with an attempt to diffuse political stand-off, told the Wall Street Journal that Brussels and Washington were “developing a plan” that would take into consideration pressing needs “in different sectors of the economy.”

The news of possible Western aid package resulted in a surge of Ukrainian government USD bond prices. “The WSJ article had a positive impact on the price,” economist Gabriel Sterne of Exotix, a trading company, told Reuters. He says that analysts keep a keen eye on the news from Ukraine, which explains the volatility in the securities market. Ukrainian USD bonds maturing in 2023 gained more than 2 points since Friday and trade at 87 cents while the bonds maturing in 2020 gained 1.6 points and trade at 87.8 cents.

Ashton gave no precise numbers but said the figures will be significant enough to deal with the government deficit. She stated the package might include “guarantees,” “investment pledges” or aid toward stabilizing the currency. Any assistance would be linked to political reforms or the appointment of a new government, she added.

Talks between Ukraine and the IMF on the $15 billion loan broke down last year when Yanukovych’s government complained the IMF conditions were too tough. “We are now looking at what the Europeans can put on the table, along with the Americans, scraping the bottom of the barrel, while pushing the IMF to soften its conditions,” said an EU diplomat. “But I fear it’ll be difficult to offer as much as the Russians.”

In the lead up to the signing of the historic Association agreement with EU, Brussels offered a trifling 610 million Euros in financial assistance while the Ukrainian government demanded a loan of 20 billion Euros. Yanukovych’s refusal to sign the accord triggered mass protests that have lasted two months and further undermined Ukraine’s economy.

In December, Yanukovych signed a deal with Russia which pledged $15 billion to bail out Ukraine’s stuggling economy. Last week Russian government announced that a further tranche of the financial package is pending on who will head the new government in Kyiv.

Source BBC

Translated by Olga Senkiv

Edited by Mariana Budjeryn

Tags: