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EU says Ukraine needs US$15b, has limited ability to help

Thursday, December 18, 2014 - 06:56

[BRUSSELS] The International Monetary Fund estimates Ukraine needs another US$15 billion in financing to withstand an economic crisis but the European Union has only limited capacity to help, European Commission President Jean-Claude Juncker said on Wednesday.

Ukrainian Prime Minister Arseny Yatseniuk appealed to the EU in Brussels this week for urgent financial aid. He says Ukraine, facing a pro-Russian rebellion in eastern territories that has killed over 4,700 people and disrupted the economy, risks defaulting unless Western donors come up with more funds. "Ukraine will need more help," Juncker told the European Parliament in Strasbourg on Wednesday. "The assessment of Ukraine's financing gap has been completed by the IMF. Ukraine will need US$15 billion in addition to what is already planned." An IMF team visited Kiev last week for talks on its existing US$17 billion bailout package.

A year of revolution and war, as well as disruptions in trade and long-standing problems with corruption and mismanagement, have pushed Ukraine's hryvnia currency to record lows and crippled the economy.

Juncker said he expected Ukraine to request another two billion euros (US$2.5 billion) from the European Union but he said the EU's member governments would have to chip in as the EU's executive Commission did not have enough money in its budget. "There is only a small margin of flexibility for additional financing next year. And if we fully use our margin for Ukraine, we will have nothing to address other needs that may arise over the next two years," Juncker said.

US assistant secretary of state for European and Eurasian Affairs Victoria Nuland, speaking at the American Enterprise Institute thinktank in Washington,said: "We expect that the IMF and World Bank will have to increase their support for Ukraine, but that the friends of Ukraine around the world will do as well.

New funding for Ukraine must be pegged to Ukraine implementing reforms, she said.

REUTERS