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Sunday, March 18, 2018

Ukraine is waiting for who will give her more credit – Russia or the EU

Ukraine is waiting for who will give her more credit – Russia or the EU

16 Dec 2013, 19:35

Text: Olga Samofalova

Printable version

“If necessary, Russia will provide Ukraine with 50 billion dollars.” With these words, analysts estimate the probability of receiving new loans by Kiev, and the willingness to give their expressed including Brussels. And it can be very advantageous for Russia, the deal – estimated how much money Russian banks in Ukraine have already issued loans.

In the Kremlin do not exclude that in the near future can be taken the decision on granting of loan to Ukraine, said the Russian presidential aide Andrei Belousov.

Belousov stressed that the situation in Ukraine now is such that without the provision of credit to the country “is simply not able to maintain economic stability”. “I do not exclude that the loan will such a request and, accordingly, it will be provided”, – said Belousov. Moreover, the decision on granting a loan to Ukraine could be accepted tomorrow at the meeting of the presidents of Russia and Ukraine Vladimir Putin and Viktor Yanukovych.

In turn, the EU also does not exclude the provision of financial compensation to Ukraine for the Association, said today the EU high representative for foreign Affairs and security policy Catherine Ashton at the meeting of the EU Council. “At the talks with President of Ukraine we explored how short-term considerations prevented him sign an Association agreement. I believe that we will be able to remove them at the expense of the EU, international financial institutions or commercial loans,” – said Ashton.

This is despite the fact that on the eve of European Commissioner for enlargement and neighbourhood policy Stefan Fule said that the community was suspending consultations with Ukraine on the Association agreement as long as Kiev did not give clear promises to sign it.

We will remind that last week the Prime Minister of Ukraine Mykola Azarov said that Ukraine needed a loan of approximately 20 billion euros, and in normal conditions”. And it was a direct appeal to the EU.

“At the moment Ukraine badly needs money, which explains the fussiness of its behavior in negotiations with the EU and Russia. But, most of all, voiced the figure of $ 20 billion is the minimum necessary, Ukrainian politicians have taken into account the possibility of its reduction in the course of negotiations”, – said the newspaper VIEW managing Director of brokerage services Concern General Invest Meruzhan Dadalyan.

What will happen tomorrow

In addition to providing loan on 17 December at the sixth meeting of the Russian-Ukrainian interstate Commission under the chairmanship of Vladimir Putin and Viktor Yanukovych also discussed the issue of the Customs Union and gas prices. So, Belousov, answering the question, do you plan to sign any documents on Ukraine’s integration into the Customs Union, said: “In the Customs Union work goes on constantly, so in a sense – Yes.

The Minister of economic development Alexei Ulyukayev also confirmed that Tuesday will come to the Commission with a road map on removing trade barriers between Russia and Ukraine. However, the specifics on the possible accession of Ukraine to the Customs Union should not wait, he said. “No. We have said that this is a big and difficult task,” – said Uljukaev to journalists.

Tomorrow Gazprom and Naftogaz of Ukraine may sign a Protocol on the price of gas, stated in his turn, the leader of the parliamentary faction of the Pro-presidential Party of regions, Alexander Efremov. “What exactly is out there the price is not specified. It will be resolved within the framework of the signing of this Protocol by the parties directly who agree on this price”, – said Efremov. According to him, Ukraine wants to achieve the average European price for gas with the gas transportation through the territory of Ukraine.

Ukrainian opposition stated that Viktor Yanukovych to ask Russia a loan of $ 5 billion and reduce gas prices to $ 200-300. “With this baggage Yanukovych is going to Moscow”, – said the leader of the Ukrainian party “Freedom” Oleg Tyagnibok, citing unnamed sources.

Meanwhile, sources told Bloomberg on Monday that the agenda of tomorrow’s talks between Putin and Yanukovych included a question on granting Kyiv credit of 15 billion dollars. While $ 5 billion Ukraine may get from Russia before the end of this year, said one of the sources.

In early December, the media, citing a source in the Russian government reported that Ukraine is negotiating with Russia on the allocation of the $ 12 billion loan and a possible contract between Gazprom and the Ukrainian company “VETEK” to supply 10 billion cubic meters of gas from January 1, 2014 at a price of $ 210-230 per thousand cubic meters.

The website of the Kremlin reports that on December 17 in Moscow will be discussed the most important issues of bilateral trade-economic cooperation”. “Following the meeting, it is expected to sign a substantial package of bilateral documents”, – stated in the message.

As Russia already gave credits

At the end of November this year, the debt of Ukrainian enterprises to four Russian banks: Gazprombank, Sberbank, VEB and VTB – have exceeded 20 billion dollars and about 280 billion roubles ($8 billion), said Vladimir Putin. Is through banks that Russia lends to the Ukrainian economy, and also provides funds for the payment by Naftogaz for Russian gas.

Russian banks actively gave loans to Naftogaz to pay for gas supplies. So, in June 2010, the Russian VTB granted Ukraine a six-month bridge loan for $ 2 billion under 6.7% per year. Half of the debt in the amount of 1 billion dollars Ukraine paid off in the summer of 2012 (payments has been extended several times), and the other half of the debt agreed to restructure Eurobonds until June 2014 and at the rate of 7.95%.

In 2011, Naftogaz of Ukraine received a loan of Gazprombank at $ 550 million for payment of the delivered gas. In the summer of 2012 the same Bank again gave Naftogaz a loan, but now at $ 2 billion. The loan was issued at 8.5% per annum maturing on June 24, 2013. It was necessary to buy 5 billion cubic meters of gas for injection into Ukrainian underground storage facilities, providing guarantees uninterrupted transit of Russian gas to Europe in winter peak period.

However, this summer Ukraine has asked to extend the maturity of this loan. At the same time Kyiv has again been asked to give $ 2 billion for the same purpose for the purchase of 5 billion cubic meters of gas for injection into underground storage facilities. This time, however, Russia gave no credit, and a discount on the purchase of this volume of gas. As estimated by experts, Ukraine has saved $ 700 million, as these 5 billion cubic meters of gas in underground storage facilities cost Kiev is not in $ 2 billion at a price of 400 dollars per thousand cubic meters, but only 1.3 billion when the cost of gas at 260 dollars per thousand cubic meters.

Who will give more

Economists believe that Russia’s attitude to Ukraine will be much more generous than the EU. “From the EU, Ukraine max can only count on 5 billion euros in the next year and a half. In the European Union own problems right now, and money to help other countries, even such important as a trading partner, the European countries no. And social discontent, particularly the largest European donors, also will be higher if such acts of assistance will be sent to countries that are not members of the Union,” says analyst financial company AForex Narek Avakian.

“Without EU membership, Ukraine can count on the support of the European Commission in the form of 2.2 billion in guarantees and 3.4 billion euros of loans from the European investment Bank, reserved in the budget of the EU for our region. Direct aid is given in smaller volumes. For example, the last loan provided to Armenia, was worth 100 million euros,” – says the Director of analytical Department United Traders Mikhail Krylov.

And here Russia to Ukraine of money is not sorry, said Avakian. “Russia has already given Ukraine loans totaling over $ 30 billion including debt for gas. And if need be, Russia will allocate another 50 billion dollars”, – says the economist.

“Ukraine for Russia is very important partner, not only in CIS but also in Eastern Europe, and the Russian government can not afford to lose a key ally in the region, cooperating on many fronts: military-technical cooperation, economic, trade, migration, etc.,” explains his logic Avakian.

In addition, Russian banks earn on loans to Ukrainian companies. “Alone on the interest they earn annually up to 1.5 billion dollars” – has counted Avakian. According to the assessment of Mikhail Krylov, Russian banks earn on loans to Ukrainian companies not less than 56 billion rubles a year (i.e. $ 1.7 billion).

“Loans to Ukrainian companies were issued at a rate higher than for Russian companies with similar credit metrics, which generally makes them more profitable for Russian banks”, – says Meruzhan Dadalyan.

In the list of issuers for allocation of funds Russian Reserve Fund of Ukraine does not appear. “Therefore, the most likely political decision on the loan with the participation of the intermediary Bank, which may be the European investment Bank or one of the largest Russian credit institutions. Thus Ukraine will receive a loan from the Bank, bonds which can be redeemed for money of the Reserve Fund”, – says Mikhail Krylov.

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