Ukraine expects to receive EUR 500 mln loan from EU in 1Q19

The Ukrainian government is counting on receiving a
second loan tranche of EUR 500 mln under the fourth EU Macro-Financial
Assistance program (MFA IV) in the first quarter of 2020, Prime Minister
Oleksiy Honcharuk told journalists in Brussels on Jan. 28. At the same event,
European Commission Executive Vice President Valdis Dombrovskis confirmed that
Ukraine has implemented all the preconditions for the tranche, Interfax-Ukraine
reported. The Commission has started internal procedures to prepare the loan’s disbursement,
he said.

Recall, the European Parliament endorsed the MFA IV program for Ukraine in June 2018,
planning to provide EUR 1 bln in lending split into two equal tranches. The
loans can be provided within 2.5 years from the date that a memorandum of
understanding between the EU and Ukraine takes effect (Nov. 30, 2018). The
first loan tranche (EUR 500 mln for 15 years, with an interest rate of 1.25%)
under the MFA IV program was disbursed in December 2018.
Ukraine has received EUR 3.3 bln in loans from the EU under four MFA programs
since 2014.

Alexander Paraschiy: Despite the
positive assessment from the European Commission, we see that the next MFA loan
tranche will, as usual, depend on Ukraine’s progress with the IMF under a new
EFF loan program. After the approval of this loan program at the
staff level in early December, Ukraine has
made no progress in its gaining approval at the higher level, as it seems to be
delaying with the implementation of all its agreed upon prior actions (among
which is stricter legislation on resolving bankrupt banks, as we understand).

Ultimately, we still believe it’s possible that
Ukraine will get both an MFA loan tranche from the EU and an EFF loan tranche
from the IMF in the coming two months, but much will depend on the parliament’s
ability to satisfy all the IMF’s demands.