Email
Password
Remember meForgot password?
    Log in with Twitter

article imageU.S. guarantees major new Ukraine loan

By Dmitry Zaks (AFP)     Jun 3, 2016 in World

The United States said on Friday it had signed a major new loan guarantee with Ukraine aimed at helping the war-scarred former Soviet republic stabilise its floundering economy.

The $1-billion (900-million-euro) commitment is the third of its kind issued by Washington since a pro-EU revolution brought down Ukraine's Russia-backed president in February 2014.

The pledge is meant to provide Ukraine with more affordable access to international capital markets and fill its gaping budget hole.

"The guarantee sends a strong signal of the United States' continued support for Ukraine as it pursues reforms that fulfill the Ukrainian people's aspirations for a prosperous and democratic future," US Ambassador Geoffrey Pyatt said in a statement.

The new US assistance is part of a $40-billion global rescue package agreed by Ukraine and the International Monetary Fund in March 2015.

Ukrainian president Petro Poroshenko  pictured in Kiev on April 19  2016  is under growing criticism...
Ukrainian president Petro Poroshenko, pictured in Kiev on April 19, 2016, is under growing criticism of his seemingly ineffective bid to stamp out wasteful government graft and achieve the prosperity he promised when elected in May 2014
Genya Savilov, AFP/File

About $17.5 billion of that money is a loan from the Fund. The rest includes a restructuring programme approved by Ukraine's private Western creditors and assistance from individual governments and international institutions.

The IMF had been frustrated by the slow adoption of painful belt-tightening measures that were resisted by populist parties and helped weaken leaders who rose to power after Ukraine's 2014 turn toward the West.

Allegations of government corruption led to the resignation of prime minister Arseniy Yatsenyuk and his replacement by pro-Western parliament speaker Volodymyr Groysman in April.

Ukraine has so far only received $6.7 billion in IMF disbursements and none since August 2015.

But the sides last month reached a staff-level agreement to resume the programme after parliament adopted a raft of austerity measures prescribed by the IMF.

That progress allowed Kiev's other partners to resume their own lending and help Ukraine shed the dysfunctional economic legacy of its Soviet past.

A long line of Ukrainians queue to withdraw cash from the Khreshchatyk Bank in Kiev on April 5  2016...
A long line of Ukrainians queue to withdraw cash from the Khreshchatyk Bank in Kiev on April 5, 2016, the same day the National Bank of Ukraine recognised Khreshchatyk as insolvent
Sergei Supinsky, AFP/File

Kiev hopes to receive $1.6 billion in fresh funds from the IMF by July.

Yet some economists warned that the new pro-Western coalition created in parliament during Groysman appointment was fragile and its economic measures under threat of being undermined by nationalist and populist factions.

"Substantial risks to a fruitful IMF cooperation remain as the government has a rather thin parliamentary majority," Austria's Raiffeisen Bank said in a research note.

- 'Strategic partners' -

The east European nation's economy contracted by 9.9 percent last year but appears to be on course to achieve modest growth in 2016.

Ukraine reported a 0.1 percent expansion of gross domestic product (GDP) between January and March compared to the same period in 2015.

This marked the first quarter of annualised growth since the end of 2013.

The news may help President Petro Poroshenko mute growing criticism of his seemingly ineffective bid to stamp out wasteful government graft and achieve the prosperity he promised when elected in May 2014.

Poroshenko on Friday took personal credit for securing the new assistance during an April 1 meeting with US President Obama on the sidelines of an economic summit in Washington.

"This bears testament to the fact that the United States and Ukraine are reliable strategic partners," Poroshenko said in a statement.

More about Ukraine, US, Economy, Loan
More news from
Latest News
Top News