Ukraine receives EUR 500 mln in EU loans

Ukraine’s Finance Ministry reported on Dec. 11 that
the EU Commission has provided the first tranche of EUR 500 mln under the fourth
program of macro financial assistance (MFA IV). The loan is repayable in April
2033 and has an interest rate of 1.25%, the ministry said. Among Ukraine’s
commitments under the program, MinFin listed progress in anti-corruption
measures, improvement of tax administration, energy sector reform, social
policy, corporate governance in state enterprises, as well as reform in
management of state finances. Recall, the MFA IV memorandum includes 12 tasks
that Ukraine will have to implement, mostly in the areas listed by MinFin.

The MFA IV program of a total value of EUR 1.0 bln
consists of two equal tranches that can be disbursed in 2.5 years. The second
tranche can arrive in Ukraine no earlier than three months after the first one,
providing Ukraine will implement all the measures listed in the memorandum.

Alexander Paraschiy: After the Nov. 30 approval of the first MFA IV tranche
by the European Commission, the loan’s arrival was just a matter of time. This
month, Ukraine also will likely receive about USD 2 bln from the IMF and the
World Bank after their boards vote in favor of the loans on Dec. 18, which we
view as highly likely. The key question now is whether Ukraine will be able to
receive new tranches from the EU (under MFA IV) and from the IMF (under the new
stand-by program) next year. So far, we see the chances for Ukraine to
receive  any multilateral loans in 2019 below 50%.