News / Economy

Ukraine Calls for Urgent Western Aid After Yanukovich Ousted

Ukrainian opposition leader Oleg Tjagnibok, left, and Ukrainian lawmaker and chairman of the Ukrainian opposition party Udar (Punch), former WBC heavyweight boxing champion Vitali Klitschko, second left, during their talks with EU foreign policy chief Cat
Ukrainian opposition leader Oleg Tjagnibok, left, and Ukrainian lawmaker and chairman of the Ukrainian opposition party Udar (Punch), former WBC heavyweight boxing champion Vitali Klitschko, second left, during their talks with EU foreign policy chief Cat
Reuters
Ukraine appealed for urgent international aid on Monday after the fall of Russian-backed president Viktor Yanukovich cast doubt on a bailout deal with Moscow, saying it needed $35 billion over the next two years.
 
With acting President Oleksander Turchinov warning that Ukraine was close to default and “heading into the abyss”, the United States and European Union said they were looking at how to help Kyiv.
 
Both, however, indicated that any comprehensive package was likely to take shape only after elections in May and in coordination with the International Monetary Fund, which is likely to demand painful economic reforms.
 
Ukraine has been caught in a geopolitical tug-of-war between Russia and the EU. With Yanukovich now a fugitive, its chances of receiving the remaining $12 billion of a $15-billion bailout package agreed with Moscow in December, after Kyiv spurned an EU trade deal, seem to have receded.
 
Turchinov, appointed after Yanukovich was stripped of his powers by parliament on Saturday, sounded the alarm about the economy in an address to the nation on Sunday evening.
 
“Against the background of global economic recovery, the Ukrainian economy is heading into the abyss and is in a pre-default state,” he said.
 
Financial analysts said, however, that the economy was not about to collapse. Prices of its government bonds rallied and the cost of insuring its debt fell, in a sign of investors' confidence that it could avoid default.
 
The European Commission confirmed a variety of options were being discussed. “The EU has been working on an international economic support package for Ukraine - short, medium and long-term support to address the challenges of the Ukrainian economy,” said Commission spokesman Olivier Bailly.
 
EU officials said it was highly unlikely Europe, the United States or anyone else would put the kind of sums mentioned by Kyiv on the table right away. However, smaller bilateral loans, possibly coordinated by the EU, could be used to give short-term help, they added.
 
Discussions have already taken place with Japan, China, Canada, Turkey and the United States on possible help, a senior European Commission official said, and efforts are being made to keep Russia engaged in the process as well.
 
Elections scheduled for May 25 to elect Yanukovich's successor were crucial.
 
“Many of the proposals we're working on require an IMF deal to be in place, which means an operational government in Ukraine, so it can't happen until after the elections,” said a separate official involved in efforts to help Ukraine.
 
The IMF agreed a $15.5 billion loan for Ukraine in 2010, but suspended the deal last year after Kyiv failed to implement the required reforms, which included removing gas price subsidies and freely floating the currency.
 
Complementing the IMF
 
Washington offered help on Monday but linked it to reforms and a new IMF deal.
 
“The United States, working with partners around the world, stands ready to provide support for Ukraine as it takes the reforms it needs to, to get back to economic stability,” said White House spokesman Jay Carney, adding that “this support can complement an IMF program by helping to make reforms easier”.
 
Separately, Treasury Secretary Jack Lew and IMF Managing Director Christine Lagarde agreed that Ukraine would need both bilateral and multilateral support for any reforms, the U.S. Treasury said.
 
Three months ago, Brussels was hoping to sign Ukraine up to the far-reaching free trade and association agreement that would have brought the country of 46 million more closely into the EU's political and economic sphere of influence.
 
Yanukovich rejected that deal at the last minute, deciding instead to accept the aid and cheaper gas from Russia. That led to weeks of popular protests culminating in his fall.
 
Russian economy minister Alexei Ulyukayev said the next $2 billion installment of its bailout for Ukraine was “ready to go” but repeated Moscow's stand that it first wanted to see who would be running the country.
 
“Our position is, we are going to continue with that. But we would like to know, who are our partners?” Ulyukayev said during an event at the U.S. Chamber of Commerce in Washington.
 
Moscow has also said any extension of the deal cutting the price of Russian gas must be negotiated with Ukrainian companies and the government.
 
EU foreign affairs chief Catherine Ashton was meeting officials in Kyiv to discuss the economy.
 
Ukraine has around $6.5 billion in foreign debt payments to make before the end of 2014 and needs a further $6.5 billion to cover its current account deficit, while it is also $1 billion in arrears to Russia for gas supplies, according to estimates from Commerzbank.
 
Estimates vary but Goldman Sachs reckons that the central bank's currency reserves are down to $12-$14 billion, a sum which its obligations could wipe out.
 
Kiev must repay a $1 billion eurobond in early June and the government has also guaranteed a $1.6 billion eurobond issued by state energy company Naftogaz, which falls due in September.
 
Ukrainian bondholders remain nervous, despite Monday's market rally.
 
“As investors we need to see there is a source of funds to repay debt. There was a sure source of funds which was Russia and that's not there any more,” said Angus Halkett, a portfolio manager at Stone Harbor Partners, which owns Ukrainian debt.

You May Like

Disappointing Report on China's Economy Shakes Markets

In London and New York shares lost 3 percent, while Paris and Germany dropped around 2.4 percent More

DRC Tries Mega-Farms to Feed Population

Park at Boukanga Lonzo currently has 5,000 hectares under cultivation, crops stretching as far as eye can see, and is start of ambitious large-scale agriculture plan More

Video War, Drought Threaten Iraq's Marshlands

Areas are spawning ground for Gulf fisheries, a resting place for migrating wildfowl, source of livelihood for fishermen and herders who have called the marshes home for generations More

This forum has been closed.
Comment Sorting
Comments
     
by: Taichi Robinhood
February 25, 2014 7:16 PM
So the Ukrainians will have to suffer for their unrest, in which only the opposition leaders will benefit. Is the price too high that the ordinary Ukrainians are paying?

by: Igor from: Russia
February 25, 2014 3:44 AM
It is time for some opposition supporters such as the USA and the EU to show their kindness and generosity to save Ukraine's economy. I think 15 billion us dollars is a small amount of money within their ability.

by: Rumpoy from: EU
February 24, 2014 11:24 PM
yeah sure... how much...? what a preposterous idea. Look Ukraine, you don't seem to be very intelligent people... you need to go ahead legislate transparency accountability and responsibility... than maybe, just maybe... you will see some aid... not cash... but aid... Europe is not going to repeat the Arab Palestinian experience in which we essentially subsidized the extravagant lives of some really squalid Arab terrorist reprobates. We are broke..!! Europe is BROKE!!! and we are not going to finance some degenerate fascist regime in the Ukraine.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nobel Prize Winner Malala Talks to VOAi
X
August 31, 2015 2:17 AM
Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.

VOA Blogs

World Currencies

EUR
USD
0.8916
JPY
USD
121.32
GBP
USD
0.6487
CAD
USD
1.3252
INR
USD
66.401

Rates may not be current.