EU could present Ukraine new aid package, with strings attached

12 January 2018

The European Union is in a position to offer the Ukrainian government a new aid package, reports Kyiv Post. Jurgis Vilcinskas, the press and information section head for the European Union mission in Ukraine, told the Kyiv Post on Jan. 9 that the details are still not developed and would have to pass European Parliament and European Council legal procedures, but that the program could be announced in early 2018.

 

Any future package will certainly be dependent on the Ukrainian government’s performance in tackling corruption. Kyiv Post quotes Ukrainian national deputy Hanna Hopko as telling it on Jan. 9, “…the Ukrainian government has lost the credit of trust of its international partners.”

 

The EU initiated a third macro financial assistance program (MFA III) with Ukraine in spring 2015, which foresaw the provision of EUR 1.8 bln in loans in three tranches. Ukraine was only able to get two tranches totaling EUR 1.2 bln before the program expired in early January 2018. The European Commission stated in December 2017 it is willing to assess a Ukrainian proposal for a renewed loan program in early 2018.

 

James Hydzik: Given the success that the international donor community has achieved in pushing reform through, the logic for the EU to offer further loans in exchange for reform is clear. The Ukrainian government can be expected to be pushed with great reluctance, but pushed nonetheless. It is in line with our expectations that the EU will offer a new MFA program this year, which might allow Ukraine to count on about EUR 0.6 bln in loan this year.

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