Europe discussing financial assistance to Ukraine

Europe discussing financial assistance to Ukraine

PanARMENIAN.Net - Europe is discussing a range of options for short- and longer-term financial assistance to Ukraine, but any comprehensive package is only likely to take shape after elections in May and in coordination with the International Monetary Fund, Reuters reports.

Ukraine's finance ministry said on Monday, Feb 24, it needed $35 billion to survive 2014 and 2015 and asked for the first payments to be made in the next one to two weeks, possibly alongside a donors' conference.

It is highly unlikely Europe, the United States or anyone else would put that much money on the table right away. But smaller bilateral loans, possibly coordinated via the EU, could be used to provide short-term assistance, officials said, according to Reuters.

Discussions have already taken place with Japan, China, Canada, Turkey and the United States on potential donations, a senior European Commission official said, and efforts are being made to keep Russia engaged in the process as well.

"Nothing can be ruled out," said a separate official involved in efforts to help Ukraine. "Many of the proposals we're working on require an IMF deal to be in place, which means an operational government in Ukraine, so it can't happen until after the elections. But the EU is in a good position to coordinate action if member states want to provide money. They have the resources and there is a willingness to help."

The European Commission confirmed a variety of options for financial assistance were being discussed.

"The EU has been working on an international economic support package for Ukraine - short, medium and long-term support to address the challenges of the Ukrainian economy," said Commission spokesman Olivier Bailly.

"It's too early for us to point out one option or set of options, but we are here to help provided there is economic reform in Ukraine. We don't exclude any of the options necessary to bring economic support to Ukraine."

He played down the possibility of a donors' conference but indicated that Catherine Ashton, the EU's foreign affairs chief, who is visiting Kiev, may announce something later.

"I'm not personally aware about any decision taken for such a conference, but as high representative Catherine Ashton is actually in Kyiv, I'm sure she will be the first one to comment if such an announcement is confirmed," he said.

EU and U.S. officials have said they intend to coordinate any long-term aid for Ukraine via the IMF, which has been in discussion with Kiev on assistance for years. It agreed a $15.5 billion loan in 2010, but suspended the deal last year after Ukraine failed to implement the required reforms.

After elections have been held, EU officials hope Ukraine will be able to resume formal talks with the IMF and commit itself to reforms, which include removing subsidies from gas and freely floating the currency.

If Ukraine can strike a new agreement with the IMF, that would allow the EU to disburse around 2-3 billion euros of extra assistance, officials say, and could unlock further help from the World Bank, the European Bank for Reconstruction and Development, and the European Investment Bank.

"The IMF would be precisely the right partner," said Steffen Seibert, spokesman for German Chancellor Angela Merkel, according to Reuters.

"The main elements of what a possible aid package could look like are known. There can be help from the IMF in supporting economic reforms. Under the same conditions, namely the readiness to undertake reforms, the EU is ready to support the country, to offer macro-financial help."

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