European Investment Bank provides Ukraine with EUR 600 mln loan

The European Investment Bank (EIB) approved a EUR 600 mln loan for Ukraine, the Interfax news agency reported on Dec. 22. The agreement was signed by Prime Minister Arseniy Yatsenuk and EIB Vice President Laszlo Baranyay. The first loan involves EUR 400 mln to implement an investment project to help develop Ukraine’s private sector called, “Base loans for small and medium enterprises and companies with middle capitalization level.” The second loan involves EUR 200 mln to implement the project, “Emergency credit program to renew Ukraine,” which is aimed at repairing infrastructure damaged during military actions in Ukraine. The funds will also be used to meet the needs of refugees, Baranyay said.

Alexander Paraschiy: For sure, EUR 600 mln will not solve Ukraine’s solvency problems and the loan’s provisions – to be extended over time – won’t help to prevent gross reserves from slumping further. Still, we see this agreement as an encouraging signal ahead of the IMF decision to provide the next loan tranche, indicating that IFIs are positive about future cooperation with the country. Of course, the main factor in this decision will be the 2015 central state budget, to be presented today in parliament.