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 Obama Announces Plan to Send 3,000 Troops to Liberia in Ebola Fight

At US Centers for Disease Control and Prevention, Obama details troop deployment and other pieces of US plan More

Video China Muslims Work to Change Perceptions After Knife Attacks

Muslims in Kunming say that they condemn the violence, it is not a reflection of the true beliefs of their faith More

Humanitarian Aid, Equipment Blocked in Cameroon

Move is seen as a developing supply crisis in West Africa 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.
Enviropreneur Seeks to Save the Environment, Empower the Communityi
X
September 16, 2014 2:06 PM
Lorna Rutto, a former banker, is now an ‘enviropreneur’ - turning plastic waste into furniture and fences discusses the challenges she faces in Africa with raw materials and the environment.
Video

Video Enviropreneur Seeks to Save the Environment, Empower the Community

Lorna Rutto, a former banker, is now an ‘enviropreneur’ - turning plastic waste into furniture and fences discusses the challenges she faces in Africa with raw materials and the environment.
Video

Video West Trades Accusations Over Ransoms

As world leaders try to forge a common response to the threat posed by Islamic State militants in Iraq and Syria, there is simmering tension over differing policies on paying ransoms. In the past month, the jihadist group has beheaded two Americans and one Briton. Both countries refuse to pay ransom money. As Henry Ridgwell reports for VOA from London, there is uncertainty in the approach of some other European nations.
Video

Video Scotland Independence Bid Stokes Global Interest

The people of Scotland are preparing to vote on whether to become independent and break away from the rest of Britain, in a referendum being watched carefully in many other countries. Some see it as a risky experiment; while others hope a successful vote for independence might energize their own separatist demands. Foreign immigrants to Scotland have a front row seat for the vote. VOA’s Henry Ridgwell spoke to some of them in Edinburgh.
Video

Video Washington DC Mural Artists Help Beautify City

Like many cities, Washington has a graffiti problem. Buildings and homes, especially in low-income neighborhoods, are often targets of illegal artwork. But as we hear from VOA’s Julie Taboh, officials in the nation's capital have come up with an innovative program that uses the talents of local artists to beautify the city.
Video

Video US Muslim Leaders Condemn Islamic State

Leaders of America's Muslim community are condemning the violent extremism of the Islamic State group in Iraq and Syria. The U.S. Muslim leaders say militants are exploiting their faith in a failed effort to justify violent extremism. VOA correspondent Meredith Buel reports.
Video

Video Americans' Reaction Mixed on Obama Strategy for Islamic State Militants

President Barack Obama’s televised speech on how the United States plans to “degrade and destroy” the group known as the Islamic State reached a prime-time audience of millions. And it came as Americans appear more willing to embrace a bolder, tougher approach to foreign policy. VOA producer Katherine Gypson and reporter Jeff Seldin have this report from Washington.
Video

Video Authorities Allege LA Fashion Industry-Cartel Ties

U.S. officials say they have broken up crime rings that funneled tens of millions of dollars from Mexican drug cartels through fashion businesses in Los Angeles. Mike O'Sullivan reports that authorities announced nine arrests, as 1,000 law enforcement agents fanned out through the city on Wednesday.
Video

Video Bedouin Woman Runs Successful Business in Palestinian City

A Bedouin woman is breaking social taboos by running a successful vacation resort in the Palestinian town of Jericho. Bedouins are a sub-group of Arabs known for their semi-nomadic lifestyle. Zlatica Hoke says the resort in the West Bank's Jordan Valley is a model of success for women in the region.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid

World Currencies

EUR
USD
0.7722
JPY
USD
107.08
GBP
USD
0.6171
CAD
USD
1.1041
INR
USD
61.075

Rates may not be current.