People hold the Ukrainian national flag as they gather at the Pantheon to call for peace between Ukraine and Russia, in Rome, Italy, February 15, 2022. REUTERS/Guglielmo Mangiapane
February 17, 2022
By Karin Strohecker and Natalia Zinets
LONDON/KYIV (Reuters) – Ukraine is working with the United States and other Western nations on unlocking billions of dollars in funding to shore up its finances and is looking to the International Monetary Fund for another deal, the country’s finance minister said.
Serhiy Marchenko told Reuters on Thursday his government was in bilateral talks with Washington about creating a vehicle that would allow the United States and other countries to transfer reserve assets issued by the International Monetary Fund, so-called Special Drawing Rights (SDRs), to Kyiv.
“We are discussing a very sophisticated tool which can help us with SDR allocation,” Marchenko said in an interview via video link from Kyiv.
The push, said Marchenko, was just one of a number of initiatives to help Ukraine mitigate some of the impact from the conflict with Russia, which has amassed more than 100,000 troops on the border with its western neighbour, sparking fears in Western capitals that Moscow is planning to invade the country. Moscow has denied any invasion plans.
Marchenko also said he hoped the U.S. Congress would sign off soon on a $1 billion guarantee that was announced by U.S. Secretary of State Anthony Blinken on Monday.
“The mechanism is very simple…U.S. guarantee means that we can borrow with a triple A rating,” said Marchenko, adding he expected the funds from the loan to be in place by year-end.
MORE BOND BUY BACKS POSSIBLE
Furthermore Kyiv expected to receive the first half of a 1.2 billion euro loan from the European Union by early April and a loan from Canada in March. The government is also in talks with Japan about financial support, Marchenko added.
“We can top up necessary finance to finance our deficit, we’ll be able to support our currency as well,” he said.
Ukraine is relying on funding from Western capitals and the IMF after yields on its sovereign dollar bonds spiked to above 10% early in the year when the escalating tensions with Russia saw investors ditch Ukrainian bonds, effectively shutting the country out of international capital markets.
Meanwhile Kyiv is also hoping to get the remaining $2.2 billion available under its current IMF agreement before the programme runs out in June. An IMF mission is due in Kyiv for talks this month, and if successful could see $700 million dispatched, with the remainder coming due thereafter.
Marchenko further said his government was hoping to agree another deal with the IMF, though talks would only start in the second half of the year once the current programme was completed successfully.
“Our interest is to have such a programme,” he said. “When and how we can settle it, and what mechanism we can use depends on the time when we start this discussion.”
He said the government would continue to make use of declines in bond prices to buy back its debt, as it did in previous months. “If we see opportunity, we’ll do it,” he said. “But now we want to cover our deficit needs first and for most and maybe then we can decide.”
Speaking about the prospect of Washington and its Western partners imposing sanctions on Russia in case of a Ukraine invasion, Marchenko said a show of unity was key.
“If these countries agree on tough sanctions, it would be better for Ukraine to prevent any possible Russian aggression.”
(Reporting by Karin Strohecker in London and Natalia Zinets in Kyiv; Editing by Mark Heinrich)
Source: One America News Network
