EU hints EUR 20 bln in financial help to Ukraine

The European Union (EU) may provide up to EUR 20 bln to support reforms in Ukraine and prevent sovereign default, Elmar Brok, chair of European Parliament foreign affairs committee, told the 1+1 television network on Feb. 23. “I believe there will be EUR 20 bln on the table … and this support could be provided urgently, to prevent default,” he said. He also declared his hope that Ukraine will appoint a new government soon and provide a clear reform strategy that will enable the country to count on macro financial support from the West. “We will support this government. People should not be afraid of default,” he added.

Ukraine’s Finance Ministry stated on Feb. 24 that Ukrainian officials had a series of meetings with representatives of “the EU, U.S., other countries and financial organizations” on urgent financial aid to Ukraine. The total amount of macro support to Ukraine may amount to USD 35 bln in 2014-2015, acting Finance Minister Yuriy Kolobov stated.

Alexander Paraschiy: Brok’s statement in and of itself decreases Ukraine’s sovereign risk. The hinted size of macro support looks incredibly high. Recall, Russia earlier outperformed the West with USD 15 bln macro support to Ukraine. But nevertheless, we believe EUR 20 bln looks realistic.

To us, it looks like compensation from Western governments for their insufficient support of protesters and the opposition, who were virtually left alone in dealing with a murderous president and entourage, leading to more than 100 deaths on the streets of Ukrainian cities. Now Brok promises to “not leave Ukraine alone”. We expect Ukraine’s parliament this week will be able to form a new government, which will be the first important step towards receiving financial support.