The United States will offer Ukraine up to $2 billion in loan guarantees over the next year in an effort to bolster Kiev amid the continuing conflict with pro-Russian separatists in its eastern regions.
{mosads}The Treasury Department said Tuesday that it would soon make available $1 billion in loan guarantees previously authorized by Congress, “provided Ukraine remains on-track with the reform program” it brokered with the International Monetary Fund.
The administration will also seek congressional authorization for another $1 billion in guarantees if “Ukraine continues making concrete progress on its reform agenda.”
“We are encouraged by the strong reform progress made by the Ukrainian authorities to date, and applaud their strong cooperation with the IMF and their continued commitment to difficult but necessary reforms,” Treasury Secretary Jack Lew said in a statement. “The U.S. support that I am announcing today will be part of a broader international package of support to help ensure the success of Ukraine’s reform program and ultimately restore financial stability, unleash economic potential, and allow Ukraine’s people to better achieve their economic aspirations.”
Administration officials say the loan guarantees will help Kiev protect vulnerable Ukrainian households, as the government implements a series of economic reform. Those will include anti-corruption efforts, an overhaul of the energy sector and new financial regulatory laws.
But Kiev’s financial reserves have also been stretched thin as the government has tried to pay down its energy debt to Russia, as well as its continuing conflict with Moscow-backed separatists.
Ukraine owed some $3.1 billion in overdue energy payments, and Russia had threatened to cut off the country’s natural gas supply without payment — and prepayment for additional energy. Ukraine had been withholding its payments because of a dispute over energy costs but was able to broker an agreement in October over pricing.
Along with the offer of additional U.S. aid, Kiev is looking to negotiate an additional support package from the International Monetary Fund later this month. The IMF has already provided $17 billion in bailout funds, in addition to nearly $3 billion provided by the European Union.