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Ukraine's finance minister says West's bailout financing insufficient

March 17, 2015, 10:58 UTC+3
The minister said the approved loan is enough for stabilizing the banking system but not to regain economic growth
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Ukraine's Finance Minister Natalie Jaresko

Ukraine's Finance Minister Natalie Jaresko

© Maxim Nikitin/TASS

NEW YORK, March 17. /TASS/. The West’s bailout financing for Ukraine is insufficient, Ukrainian Finance Minister Natalie Jaresko said in an interview with The Wall Street Journal published on Tuesday.

Jaresko’s statement came just a few days after the International Monetary Fund (IMF) approved an expanded rescue package for Ukraine. However, the Ukrainian finance minister said the financial aid package could stabilize the country’s financial and banking system but was not sufficient to help jump-start the economy, the paper said.

The Ukrainian finance minister said the country needed more bailout financing than currently promised.

Last week, the IMF approved a new $17.5 billion loan for Ukraine, with the first loan tranche of $5 billion. Also, Ukraine will get support worth $7.5 billion from other foreign partners, according to the Ukrainian finance minister.

In September 2014, Ukraine received a $1.39 billion loan from the IMF. Kiev is also receiving financial aid from the European Union.

Commissioner for European Neighborhood Policy and Enlargement Johannes Khan said the EU had initially given Kiev loans and grants worth €1 billion in the second half of 2014. The EU subsequently allocated an additional €3.3 million as humanitarian aid and another €860 million "to support social and economic reforms in Ukraine."

As part of its assistance program adopted in March, the EU will provide €11 billion to Ukraine in aid by 2020. The largest package of financial assistance will come from the European Investment Bank (up to €3 billion) and the European Bank for Reconstruction and Development (about €5 billion), which will be spent on targeted projects for Ukraine.

The West has opened five financial assistance programs for Ukraine, according to the Ukrainian Central Bank and Finance Ministry. They comprise the EU’s long-term MFA1 and MFA2 macro-finance programs, the IMF’s short-term stand-by loan facility, and also the World Bank’s programs for the development of Ukraine’s electric power sector.

Funds under these programs have been divided into 9 tranches, with $5.128 billion and €1.36 billion already replenishing Ukraine’s state coffers. Kiev expects a new €260 million tranche in April.

These funds, however, are not enough for Kiev to meet its liabilities. Ukraine has to repay $11 billion in 2015 while its balance of payments deficit amounts to $13 billion.

Ukraine’s external debt hit $72.9 billion as of late 2014 while its internal debt stood at $29 billion and its gold and foreign currency reserves were less than $10 billion.

Ukraine’s international reserves shrank by 12.4% as of March 1, 2015 to $5.625 billion, according to data of the National Bank of Ukraine. Former Ukrainian First Vice-Premier Sergey Arbuzov wrote on his Facebook page on March 10 that Ukraine "is coming close to the zero level of net international reserves, i.e. the indicator adjusted for the debt to the IMF."

Polish Vice-Premier Janusz Piechocinski said in a recent interview with the Western media: "Unfortunately, the elites have disappointed us. It seemed a year ago that Ukraine was on a path towards becoming a stable and predictable democracy with our system of values."

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