EUR 1.8 bln support to Ukraine adopted by EU

On April 15, EU officials adopted the European Commission's proposal of 8 January, 2015 for new EUR 1.8 bln macro-financial assistance (MFA) to Ukraine. The adoption is the final stage of the support approvals which follows the European Parliament's positive vote of March 25 and the Council agreement of March 31 on the new proposal. The EU and Ukraine will now have to agree on a Memorandum of Understanding. The Commission hopes to conclude this process in the upcoming weeks, in order to allow for the disbursement of a first tranche of EUR 600 mln before the summer break.

The new MFA comes on top of what the EU is already contributing via the State Building contract. In the course of 2014, the Commission disbursed EUR 1.36 bln under the previous MFA programs, with a final tranche of EUR 250 mln under MFA 1 to still be disbursed in April. The three MFA operations to Ukraine amount to EUR 3.41 bln.

Alexander Paraschiy: Finally the approval process of new macro-support from EU is coming to its end. Now the ball is on the Ukrainian side and assuming there will be no problems with Memorandum of Understanding, the authorities should expect EUR 600 mln arriving in June or July. For the whole year, Ukraine might receive EUR 1.2 bln under this program (conditional on the reform progress).

The EU support is very important in terms of building substantial financial flow for covering the foreign currency deficit in 2015. Recall, the IMF memorandum presumes USD 6.3 bln of bilateral and multilateral support for Ukraine, on the top of USD 10 bln from the Fund for 2015. USD 1.8 bln of the sum is expected from the EU, USD 2.0 bln should come from Eurobonds placement and the Cabinet already plans to place USD 1 bln Eurobonds under US guarantees by the end of May. The rest of the funding is expected from the World Bank and other donors.

We project Ukraine’s gross international reserves increasing up to USD 11.5 bln by the end of the year. This is assuming there will be satisfactory progress with reforms which should in turn secure substantial capital flow, and does not account for potential gains from debt operation.

Источник: Конкорд Капитал