Ukraine signs EUR 1.8 bln loan agreement with EU

Ukraine and the EU signed a third macro-financial assistance loan agreement memorandum for EUR 1.8 bln at the Eastern Partnership summit in Riga on May 22, according to a prerss release of Ukraine’s Finance Minisrty. The loan is part of a broader package of financial support for Ukraine from its bilateral and multilateral partners, whose aim is to stabilize the financial system, improve balance of payments, and implement reforms.

The EU has already provided financing for a total amount of EUR 1.61 bln in two previous macro-financial assistance programs. With the new program, the financing will equal EUR 3.41 bln, which is the largest volume of financial support for a non-EU country, according to MinFin report.

Ukraine will receive a first tranche worth EUR 600 mln in the second half of June, after the loan is ratified by parliament and the IMF Executive Board approves the second tranche of its Extended Fund Facility program.

Alexander Paraschiy: The disbursement of EUR 1.8 bln to Ukraine was adopted by EU officials already on April 15 and signing the memorandum was a formality. Ukraine should receive EUR 1.2 bln under this program by the end of 2015. EU support is a very important part of the financial plan outlined by the IMF for the current year. Recall, the IMF presumes USD 6.3 bln in support on top of its USD 10 bln loan to be disbursed this year. USD 1.8 bln of the USD 6.3 bln sum was expected from the EU and EUR 250 mln already arrived in April. USD 2.0 bln should come from a U.S.-guaranteed Eurobond placement, with a USD 1 bln sale occurring as early as May.

Assuming cooperation with the IMF goes smoothly, the international support should secure substantial capital inflow for Ukraine. Against this backdrop, we project gross international reserves increasing to USD 11.5 bln by the end of the year, disregarding the possible potential debt operation.

Источник: Конкорд Капитал