News Column

Stefan Fule outlines conditions for bailout to Ukraine.

February 16, 2014

The European Commissioner for Enlargement and European neighborhood Policy Stefan Fule has stressed the financial assistance from the West to Ukraine may be provided only in the case of reforms. At the same time, Fule refused to reveal the size of the possible bailout for Ukraine.

He added that such assistance is related to reforms and not the Association Agreement between Ukraine and the EU. According to him, the Association Agreement only provides "an additional platform or methods for introducing these reforms." Fule also said the "added value" of the EU is that it works with a number of international finance institutions and other partners, which can strengthen this bailout package.

In the mean-time, yield on Ukraine's dollar bonds rose to a record and the hryvnia slumped as political parties continue to struggle to find a solution to resolve the crisis and to break a deadlock that prevents the country to receive any kind of financial aid, either form West of Russia.

According to Bloomberg, the rate on the note due in June rose 147 basis points to 22.37% by 4:38 p.m. n Kyiv. Ukraine's currency, hryvnia, devalued 1% to 8.79 per dollar. The cost of insuring the country's debt against non-payment using credit-default swaps jumped 73 basis points to 1,252, the highest since July 2009, according to CMA prices. The yield on Ukraine's dollar bonds due in April 2023 increased nine basis points to a two-month high of 10.48%.

While Russia suggested waiting until Ukraine forms a new government to continue fulfilling Russia's latest financial support to the country, the United States and the EU are developing a short-term plan on the provision of financial aid to Ukraine.

The opposition leaders continue to demand Yanukovych's to resign, form a new pro-Western government and return to 2004 version of constitution. The 2004 amendments basically weakened the power of Ukraine's President and were overturned in 2010 by the Constitutional Court of Ukraine as they were deemed unconstitutional. At the same time, acting PM Serhiy Arbuzov said that the country's streets and administrative buildings must be clear of anti-government forces by Feb 16.

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Source: IntelliNews - Weekly Reports

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