EU releases second €600mn macro-financial assistance tranche to Ukraine

By bne IntelliNews April 5, 2017

The European Union on April 4 made a second €600mn macro-financial assistance to Ukraine to stabilise and reform its economy on April 4, President Petro Poroshenko tweeted, a day after the International Monetary Fund (IMF) released a $1bn tranche under its own support programme for the country.

The latest transfers made for a bumper week for Ukraine, with the IMF hailing the return of growth and reduction of inflation, and the doubling of the country’s international reserves, but calling for more decisive action against corruption and the stimulation of investment.

The EU tranche was transferred without conditions, despite previous delays while the Union called upon Kyiv to ensure parliament passed bills enabling a ban on timber exports to be lifted.

"The EU has disbursed the €600mn second tranche to Ukraine as part of the macro-financial assistance to stabilise the situation and reform the Ukrainian economy," Poroshenko tweeted.

According to the EU, a bid by the Ukrainian authorities to ban exports in order to establish control over deforestation and sale of timber had been unsuccessful. The EU says uncontrolled cutting and export of timber continues, but the state does not receive any direct income from this. Therefore the EU proposed to abolish the export ban and to develop a strategy for the restoration of Ukraine’s forests.

In early February 2017, European Commission President Jean-Claude Juncker said the EU would allocate a further €600mn to Ukraine even without the lifting of the timber export ban, saying it was enough to submit a corresponding bill to Parliament.

While Ukraine has an ongoing $17.5bn credit programme with the IMF, the EU in 2014 pledged to provide financial assistance totaling €11bn to Ukraine following the ouster in February that year of the regime of pro-Russian president Viktor Yanukovych. This includes €1.6bn in loans, €1.4bn in grants, €5bn from the European Bank for Reconstruction and Development, and €3bn from the European Investment Bank.

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