EU considers boosting financial aid to Ukraine to EUR 2.5 bln

EU finance ministers will discuss on Jan. 27 additional financial support for Ukraine, potentially increasing its original plan to EUR 2.5 bln (EUR 1.8 bln discussed previously), according to a Reuters news agency report on Jan. 23. "Given the urgency of the situation in Ukraine, the ministers will see how much the EU can improve upon its original EUR 1.8 bln offer," said one EU diplomat preparing for the meeting. At the same time, other anonymously quoted diplomats said that increasing aid was not a done deal. "More money from the EU budget for provisioning loans means less money for other things, so it is not so straightforward,” said another diplomat. The EU already disbursed EUR 1.36 bln in 2014 in support of Ukraine as a part of macro-financial assistance program.



Alexander Paraschiy: Western officials have been publicly mulling a financial aid boost for Ukraine for weeks now, which are important signals amid a complicated environment. Still, as previously, such support is conditional on Ukrainian authorities’ readiness to reform an inefficient economy and stick to austerity measures outlined by the IMF. The approval of a 2015 overoptimistic budget went against the previous pledges of Ukrainian authorities and, as a result, the Cabinet is engaged in tough negotiations with the ongoing IMF mission in Kyiv regarding the next tranche.



In our opinion, the result of the consultations will be a required “to do list” for the authorities, which should demonstrate a real commitment by Ukraine for tough austerity measures. We expect no advances from the IMF or the EU prior to the revision of the 2015 spending plan. Ukrainian authorities are in no position to say “no” to the demands of Western IFIs and thus we expect a positive outcome to the IMF talks. We expect that revising the budget and subsequent approval procedures by the IMF and other donors will open up funding not earlier than in late February. By that time, Ukraine will have no large external redemptions, so such postponement does not change its solvency outlook.

Источник: Конкорд Капитал