EU could present Ukraine new aid package, with strings attached

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.