Russia declines to loan Ukraine USD 5 bln

Russian Deputy Finance Minister Dmitriy Pankin said yesterday that Russia has decided not to extend a USD 5 bln loan to Ukraine, various local news sources reported. The announcement follows an overture by Ukrainian Prime Minister Yulia Tymoshenko in February, when the fate of the ultimately approved second tranche (USD 2.8 bln) of the country’s total USD 16.5 bln loan was in doubt. Ukraine had sought up to a USD 5 bln loan from Russia to help cover the government’s budget deficit. Ukraine was also rumored to have approached the USA, Japan, China, Saudi Arabia and the European Union regarding similar stopgap loans. Andrii Parkhomenko: We expect this year’s consolidated budget deficit at UAH 50 bln (5.2% of GDP). Half of the already received second tranche of the IMF loan and USD 1 bln reportedly pledged by the World Bank will be sufficient to cover almost 50% of the deficit. The remaining 50%, in our view, will be mostly covered by more funds from the IMF, and the sale of local sovereign bonds.