Ukraine Asks EU for Financial Aid With Russian Troops at Border
(Bloomberg) -- Ukraine has appealed to the European Union for additional financial aid as the country struggles to meet its obligations and faces the threat of a potential invasion from Russian troops massing on its borders.
“We have formally requested from the European Commission a long-term, macro-financial program to ensure sustainable financing in the upcoming years,” Yuriy Butsa, Ukraine’s commissioner for public debt management, said via WhatsApp.
The commission is ready to provide further support to Ukraine as long as its package, likely to last for three years, runs in parallel with a new program of support from the International Monetary Fund, a commission spokesperson said. The executive arm of the EU will discuss support for Ukraine with IMF officials in the coming weeks to ensure that it’s in line with the conditions set by the Fund.
Ukrainian President Volodymyr Zelenskiy is facing increasing financial and military pressure with the U.S. on Wednesday accusing Russia of intensifying preparations for a possible invasion. The U.S. has been monitoring the buildup of Russian forces near Ukraine’s eastern border and Secretary of State Antony Blinken promised to hit Moscow with “high-impact economic measures” in the event of an attack.
The Kremlin denies any plan to invade Ukraine and accuses the U.S. and NATO allies of provocative actions near Russia’s border.
While NATO has offered military advice and funding to support the government in Kyiv, Ukraine also needs financial help to service its public debts in the near future.
Zelenskiy’s administration has already started negotiations with the EU on the size as well as the conditions attached to a new loan package, Butsa said. The final figure will depend on an assessment of the government’s funding shortfall but, given the scale of the country’s obligations, it is likely to exceed the 1.2 billion-euro ($1.4 billion) disbursed over the last two years.
Ukraine’s existing IMF package ends in June 2022, following a six-month extension agreed in November. The country is set to receive $2.2 billion next year.
The EU paid out 600 million euros in October to help the government in Kyiv deal with the economic fallout from the Covid-19 pandemic. The bloc has provided 4.4 billion euros of loans for Ukraine under various programs.
©2021 Bloomberg L.P.