Ukraine to receive funding from EU soon, Poroshenko says

Ukrainian President Petro Poroshenko said he is confident Ukraine will receive the next loan tranche of macro-financial support from the EU, the Interfax news agency reported on Aug 19. “I’m convinced that in the nearest future, we will receive a substantial financial ‘cushion’ from the EU for funding reforms,” Poroshenko said at the ceremony of a metro station opening in Kharkiv. The next tranche should amount to EUR 0.6 bln, according to expectations of Ukraine’s central bank.

Alexander Paraschiy: It’s standard practice for Poroshenko to promise the unrealistic and we don’t share his confidence this time either. The resistance by the government to fully launch an electronic asset and income declaration system for state officials has become a key concern both for the IMF and for the EU.  Given that corruption concerns were the main reason for the IMF and EU to postpone their funding in early 2016, a perfectly functional e-declarations system will become the main precondition to resume any Western financing. To make matters worse, after the attempts of authorities to undermine the launch of e-declarations, Western observers might be inclined to take some additional time to be reassured that there is no reverse or derailment of this reform.

Against this backdrop, even after President Poroshenko promised that e-declarations will be launched on Sept. 1, we should not expect fast decisions about funding both from the IMF and the European Commission. In our opinion, October will be the earliest time any funding might arrive, even if everything with e-declarations goes smoothly. We anticipate USD 1.0 bln from the IMF, EUR 0.6 bln in the next wire from the EU and USD 1.0 bln in Eurobonds under U.S. government guarantees.