The International Monetary Fund estimates Ukraine needs another $15 billion (€12 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 yesterday (17 December).
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 $15 billion in addition to what is already planned.”
An IMF team visited Kiev last week for talks on its existing $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 from the European Union, but he said the EU’s member states 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 think-tank 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.
The crisis in Ukraine erupted after its former President Viktor Yanukovich cancelled plans to sign trade and political pacts with the EU in November 2013 and instead sought closer ties with Russia, triggering protests that turned bloody and drove him from power.
Moscow annexed Crimea in March following a referendum staged after Russian forces established control over the Black Sea peninsula in the biggest East-West crisis since the Cold War.
Pro-Russian militants control buildings in more than ten towns in eastern Ukraine after launching their uprising on 6 April. On 11 May pro-Moscow rebels declared a resounding victory in a referendum in Donetsk and Luhansk, which the West called illegal and illegitimate.
The fighting has escalated sharply after Ukrainian President Petro Poroshenko ordered on 1 July an assault on separatists. The EU's resolve to punish Russia strengthened after the downing in Ukraine on 17 July of a Malaysia Airlines passenger plane, killing all 298 people on board. 194 of the passengers were from the Netherlands.
Western leaders say pro-Russian rebels almost certainly shot the airliner down by mistake with a Russian-supplied surface-to-air missile. Moscow has blamed Kyiv for the tragedy.
On 27 August NATO and the U.S. said Russian incursions into Ukraine took an ‘overt and obvious form’ and on 28 August Poroshenko said Russia had invaded Ukraine.
A truce was agreed on 5 September, but the situation has remained volatile.
- Commission: Statement by President Juncker