Ukraine receives $3 bn first tranche of Russian bailout

24th December 2013, Comments 0 comments

Ukraine on Tuesday received $3.0 billion in the first tranche of a financial rescue plan from Russia that has been denounced by the pro-European opposition, Ukrainian Prime Minister Mykola Azarov said.

"The National Bank of Ukraine has received the first tranche on its account. It is a stabilising factor for us," he said during talks with his Russian counterpart Dmitry Medvedev in Moscow, the Ukrainian government website quoted him as saying.

During a visit by Ukrainian President Viktor Yanukovych to Moscow a week ago, Russian President Vladimir Putin decided to provide the financial assistance to Ukraine, which is in recession and according to analysts was on the verge of default.

Moscow will buy $15 billion of Ukrainian bonds, including $3 billion by the end of the year, and also knock one third off the price of Russian natural gas exports to Ukraine.

"Thanks to the reached agreements, our ratings went up. We came out of the zone which we were in," Azarov told Medvedev. Ukraine's debt is currently rated deep into junk status by the major agencies.

Medvedev confirmed for his part that Russia had now acquired $3 billion of Ukraine government bonds.

With anti-government protests raging in the centre of Kiev over the scrapping of a landmark integration pact with the European Union as a result of Kremlin pressure, the Ukrainian opposition has condemned the Moscow deal as a sellout.

They suspect hidden strings are attached, as buying the Ukrainian government bonds will cost Russia around one third of the remaining money in its national welfare fund.

Indicating the political nature of the decision, analysts said the colossal Russian bailout is aimed at strengthening Kremlin influence over its neighbour and make Ukraine more dependent on Moscow.

The provided money will be enough to save Ukraine from the risk of default next year, without having to turn to the International Monetary Fund or the European Union for extra funds.

The EU has repeatedly reiterated its willingness to still seal the so-called Association Agreement with Ukraine, and has urged the post-Soviet country to resist pressure from Russia, offering to assist in obtaining an IMF loan.

Azarov said Kiev could not accept the IMF's strict conditions for economic reform.

The premier told Medvedev that after the bailout Kiev would focus on improving its trade with Russia, which suffered during the government's drive for EU integration.

"In 2014, we will seek to renew our trade and economic relations with Russia and reach the level of at least 2011," he said.

"It is extremely important for us, because these are our jobs, budget revenues. What the presidents agreed, we have to implement at the government level"

© 2013 AFP

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