US signs billion dollar loan guarantee with Ukraine

The United States signs a $1 billion loan guarantee deal with crisis wrecked Ukraine in order to boost its battered economy

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

The US loan guarantee agreement signed by officials on Monday is a share of a $7.5 billion support package for Ukraine who is battling with pro-Russian separatists since April 2014 in eastern Ukraine. 

Although, Russia has repeatedly denied accusations of sending forces to help the rebels in eastern Ukraine. They have admitted that there are Russian nationals fighting Ukraine’s Luhansk and Donetsk regions alongside separatists.

The Ukrainian Finance Minister Natalie Jaresko expressed his gratitude to the US for their constant support while noting that “the loan guarantee is a cornerstone of that support and comes at a critical time for their country."

The deal is expected to relieve Ukraine who is currently struggling to reach negotiations with creditors in order to restructure its debt. If creditors approve, an emergency sum of $17.5 billion of the $40 billion international bailout fund offered by the International Monetary Fund will be unblocked. 

"Since we signed our first loan guarantee agreement one year ago, Ukraine has worked closely with the IMF, the World Bank, the United States, and other members of the international community to implement a robust reform program that will help stabilize Ukraine's economy and lay the groundwork for future growth and prosperity," said US Treasury Secretary Jacob Lew.

If concrete steps towards economic reforms are taken and negotiation talks with the Congress are settled there is a “ possibility of providing an additional loan guarantees of up to $1 billion at the end of 2015,” said US Ambassador Geoffrey R. Pyatt.

Torn apart by the insurgency in its industrial east and economic crisis, Ukraine's debt has exploded to almost 100 percent of its gross domestic product. The economy shrank 17.6 percent in the first quarter from a year ago.

TRTWorld and agencies