US to provide third $1 billion loan guarantee to Ukraine

White House says US is ready to provide third $1-billion loan guarantee to Kiev if progress is made on implementing reforms

Photo by: Reuters (Archive)
Photo by: Reuters (Archive)

US Vice President Joe Biden (L) and Ukrainian President Joe Biden speaking at a news conference in the capital Kiev, Ukraine, November 21, 2014.

The White House said on Thursday that the United States is ready to contribute a third $1-billion loan guarantee to Ukraine depending on Kiev’s continued progress on corruption and tax reform, that will help stabilise the country’s economy.

Vice President Joe Biden had a phone conversation with Ukrainian President Petro Poroshenko on Thursday. Apart from the loan guarantee the two leaders also talked about the implementation of the Minsk agreements and economic reforms.

The Minsk II agreement was signed by the leaders of Ukraine, Russia, France, Germany as well as pro-Russian separatists to take measures for appeasing the war in the Luhansk and Donetsk regions of Ukraine on February 11, 2015.

The conflict between Ukraine and the pro-Russian separatists has been ongoing since April 2014, causing the deaths of more than 8,000 people.

Kiev and Western governments accuse Russia of sending forces and weapons to back the rebels, but the country denies having any direct involvement in the conflict.

On Wednesday, Ukrainian Prime Minister Arseny Yatseniuk said the government could lose support of its Western backers if arguments between the government and parliament interrupt its reform efforts.

Ukraine has pledged to revise its tax system under a bailout programme led by International Monetary Fund (IMF). However, the disagreement on size of tax cuts has delayed completion of a draft budget for 2016, holding up the payment of the next $1.7 billion portion of IMF loans as well as $2.3 billion from the US and EU for this year.

The US loan guarantee is a share of a $7.5 billion support package for Ukraine, the second deal for a $1 billion loan was signed in May 2015.

TRTWorld and agencies