EU disburses EUR 500 mln to Ukraine

The EU distributed a EUR 500 mln loan to Ukraine on Dec. 3, the European Commission reported on its website. This is the final loan tranche of the EUR 1 bln Macro-Financial Assistance (MFA II) program for Ukraine approved earlier this year. With this loan, the total disbursement from MFA programs increased to EUR 1.36 bln, and EUR 250 mln more remains available, the EU Commission stated. The loan was financed by the Commission’s issuance of a 15-year bond yielding 1.363% and Ukraine got this loan under the same conditions, according to the release.

The MFA programs are aimed at supporting Ukraine financially while encouraging structural reforms that improve governance, deliver sustainable economic growth and support legislative harmonization with the EU. Specifically, the MFA supports reforms in the areas of public finance management and anti-corruption, trade and taxation, the energy sector and the financial sector.

Alexander Paraschiy: This wire from the EU is very timely as it will provide needed to support the state budget and mitigate gross international reserves contraction. Although this support isn’t enough to prevent gross international reserves from declining below USD 10 bln by the end of 2014, it will substantially reduce hryvnia printing needs for budget deficit funding in December, which we considered to be among the main risks for both hryvnia stability and potential IMF cooperation.