West approves $3.2 billion package for Ukraine

This means Kyiv is about to receive $3.23 billion.

“[We] welcome the adoption of the EU Commission proposal on autonomous trade measures for Ukraine [and] additional macrofinancial assistance of 1 billion euro,” EU Commissioner for Enlargement and Neighbourhood Policy Stefan Fule said on April 14 on Twitter.

Aid is intended to contribute to covering Ukraine’s urgent balance-of-payments needs as identified in the government’s economic program supported by the IMF. The trade measures will come in effect on April 23.

The news about $1 billion package from the U.S. came from Ukraine’s Prime Minister Arseniy Yatsenyuk who told about the agreement signed in Washington D.C. between American and Ukrainian governments. Ukrainian delegation is currently negotiating with the International Monetary Fund about $14-18 billion bailout in 2014-2015.

Oleksandr Shlapak, Ukraine’s finance minister, told Bloomberg TV on April 11 that he expects the IMF to provide $7 billion this year. However, IMF earlier said in a statement that fund’s package may come as a key opening access to wider amount of financial help from the West reaching as much as $27 billion.

Russia claims Ukraine owes it $2.2 billion for the gas supplies. Kyiv also has to repay as much as $10 billion of direct government debt this year, while state oil and gas monopoly Naftogaz’s eurubond worth $1.6 billion matures in September.

The country’s financial situation remains tense as unrest continues in eastern Ukraine. Kremlin-backed separatists appear to be trying to annex Donetsk, Kharkiv and Lugansk oblasts. The same scenario took place earlier in Crimea, where illegitimate government led peninsula to join the Russian Federation.

Four people were killed in the eastern region with one Ukrainian serviceman among them. Armed pro-Russian separatists ignored a deadline to free official buildings that they have previously occupied.

EU foreign ministers, gathering for a meeting on April 14 in Luxembourg, said the bloc is about to introduce a third round of sanctions against Russia, including economic measures. Russian Foreign Minister Sergei Lavrov denied his nation is involved in the unrest in eastern Ukraine.

The yield on Ukraine’s eurobond due 2023 jumped 54 basis points to 9.92 percent on April 14 and the hryvnia reached 12.85 per dollar on average on the interbank market, bringing this year’s loss to 37 percent.

The national currency lately has been at its lowest level since its introduction in 1996.

Kyiv Post associate business editor Ivan Verstyuk can be reached at verstyuk@kyivpost.com.