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The freezing cold war
Ukraine Won't Get 2nd Round of IMF Funds in 2014

Ukrainian Finance Minister Oleksander Shlapak announced yesterday that Kiev does not expect to receive the next tranche of its IMF relief by the end of the year. That means that Ukraine can expect to see only about €760 million this year, much less than previously expected. Reuters reports:

Ukraine, which has been fighting pro-Russian separatists in its east and struggling to resolve a months-long gas pricing dispute with Moscow, badly needs cash to support its budget, pay off debts and prop up its faltering hryvnia currency.

Kiev had expected that a second tranche, worth $2.7 billion, of the IMF bailout would come in December after the Fund’s mission was due later this month. But Shlapak said an IMF visit was unlikely before a new government was formed.

Meanwhile, Ukraine is angling to get Russia to turn on the gas again, but Moscow is demanding a high price: Kiev’s sizable outstanding bill to be paid, plus a Western guarantee that Ukraine will be good for all past and future charges. The talks continue this week, though not with great optimism on Kiev’s part:

The Russian and Ukrainian energy ministers are expected to hold talks with the European Commission in Brussels on Wednesday over Ukraine’s unpaid bills and the price Kiev pays for its gas.

Shlapak said a deal was unlikely.

“I have the impression that the Russian side does not want to negotiate,” he said. “The conditions that are proposed do not stand up to criticism.”

Most unfortunately, the Finance Minister is probably right. And with the IMF deciding not to pay the second tranche this year, Kiev will bring less to the table as it keeps bargaining for enough fuel to see it through the first months of winter—and Russia will likely keep stringing both Kiev and its Western supports along.

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  • Pete

    The Ukrainians are a hearty bunch. A little cold weather won’t make them pay up.

  • Andrew Allison

    Shame on those dastardly Russians for expecting Ukraine’s past due gas bills to be paid, and to be paid for current and future deliveries! There’s a lot to be criticised about Russia’s behavior in Ukraine, but demanding payment for gas delivered is not one of them. Incidentally, there appears to be little understanding here of the fact that the EU’s contracts are take or pay, i.e., the EU doesn’t have the option of only paying for what it takes. It will pay for any gas diverted by or to Ukraine.

  • Fat_Man

    IMF doesn’t want its money to be used to pay off the Russians. There is a big surprise.

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