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

Video Miami Cubans Divided on New US Policy

While older, more conservative Cuban Americans have promoted anti-Castro political movement for years, younger generations say economically, it is time for change More

2014 Sees Dramatic Uptick in Boko Haram Abductions

Militants suspected in latest mass kidnapping of over 100 people in Gumsuri, Nigeria on Sunday More

Video Cuba Deal Is Major Victory for Pope

Role of Francis hailed throughout US, Latin America - though some Cuban-American Catholics have mixed feelings 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.
Sudan School Becomes Target of Aerial Attacksi
X
December 19, 2014 12:45 AM
The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Putin Says Russian Economy Will Emerge Stronger

Russian President Vladimir Putin has said his country's sinking economy will not only recover but also become stronger, despite falling oil prices and Western sanctions over Ukraine. VOA's Daniel Schearf reports.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8143
JPY
USD
119.23
GBP
USD
0.6390
CAD
USD
1.1596
INR
USD
63.304

Rates may not be current.