EU edging closer to disbursement of EUR 1 bln for Ukraine

Ukrainian Minister of Finance Oleksandr Shlapak signed a Memorandum of Understanding (MoU) on the new EUR1 bln macro-financial Assistance loan program to Ukraine, paving the way for its ratification by the Ukrainian Parliament, the European Commission reported on May 13. This follows the signing of the MoU by European Commission Vice-President Siim Kallas on April 28 and by the Chairman of the National Bank of Ukraine Stepan Kubiv on May 12. Following ratification, the first tranche of the loan will be disbursed to Ukraine as soon as possible.

In addition, President of the European Commission José Manuel Barroso and Prime Minister of Ukraine Arseniy Yatsenyuk signed a new program on May 13 to support the transition process in Ukraine.  The new program, worth EUR 355 mln, and complemented by a EUR 10 mln program is aimed to support the civil society, will help the government of Ukraine to address short-term economic stabilization needs. Disbursement of the money from this contract will be conditional on the progress of reforms in the following areas: anti-corruption, public finance management, civil service, constitutional reform, electoral legislation and justice.

Alexander Paraschiy:   The money combined with the previously decided EUR 610 mln Macro-Financial Assistance program, will be the first delivery from the EUR 11 bln package of support to Ukraine, announced by the President of the European Commission on March 5.  It is clearly a positive signal; however, similar to the IMF arrangement, the disbursement of the funds will be conditional on implementation of the reform commitments.  Still, the first part of the funds will most likely arrive promptly in May thus supporting financial accounts and strengthening Ukraine’s gross foreign reserves.