Ukraine receives USD 1 bln loan guarantee from U.S. government

The U.S. government provided Ukraine with a loan guarantee for USD 1 bln, the Finance Ministry reported on May 18. The agreement was signed by Ukraine’s Finance Minister Natalie Jaresko, U.S. Ambassador to Ukraine Geoffrey Pyatt and USAID Mission Director Jed Barton. The guarantee will be issued as part of a broad package of USD 7.5 bln financial support from Ukraine’s bilateral and multilateral partners in 2015, the Ministry clarified.

The deal will allow Ukraine to issue U.S.-guaranteed Eurobond in the near future. The government originally planned to issue the notes by the end of May 2015 after a USD 17.5 bln IMF agreement was approved in March. A similar deal was made in May 2014, when Ukraine raised USD 1 bln from the placement of its first U.S.-guaranteed Eurobond.

Alexander Paraschiy: These funds will underpin gross international reserves and will improve confidence in the financial sustainability of Ukraine. According to the IMF memorandum, Ukraine will receive an extra USD 1 bln in guarantees from the U.S. government in 2H15 if reforms progress is satisfactory. The guarantees come on the top of USD 10 bln committed for this year from the IMF (USD 4.87 bln have already arrived). The IMF memorandum also provides for Ukraine receiving loans of USD 1.8 bln from the European Union, USD 1.8 bln from IFIs and USD 0.7 bln from other sources. We estimate the funds will guarantee gross international reserves strengthening to at least USD 11.5 bln by the end of 2015.