Ukraine is betting that foreign aid and improved tax collection during an economic recovery will help it overcome the financial difficulties posed by warnings from the United States and its allies about a possible Russian invasion.
Ukrainian President Volodymyr Zelensky has said that the United States and the Western media are undermining Ukraine’s economy by spreading “panic” about the danger of a Russian invasion. The government in Kiev insists that the more than 100,000 Russian troops gathered at the border are not enough for a full-scale invasion, while the Kremlin denies any such intention.
With the Zelensky government trying to stabilize Ukraine’s image in the eyes of foreign investors, Finance Minister Sergei Martchenko said in an interview that Kiev expects the European Parliament to approve unconditional loans of $ 1.2 billion on February 14. as the government began talks with the US on debt guarantees.
Even if the situation remains tense, Ukraine also managed to increase its state budget revenues in January more than expected, a result that, according to Martchenko, could send a positive message to investors, as the country of 41 millions of residents are struggling to capitalize on debt markets.
“It helped us create a cushion enough to mitigate any risk we could imagine,” Marchenko said in an interview with Bloomberg. “We need positive messages to calm the markets, to show that we are strong enough, that we are able to repay our debts.”
Ukraine’s international reserves fell more than expected last month and the hryvnia fell to a seven-year low ahead of a series of high-level diplomatic visits to Kiev, including by British Prime Minister Boris Johnson and Turkish President Recep Tayyip Erdogan.
Yields on Ukrainian government bonds in dollar expiring in 2033 are over 9% or close to this level since December.
The Treasury Department bought part of the $ 1.4 billion bonds expiring in September.
Ukraine has already received $ 100 million in support from Canada and is continuing talks with Germany, the United Kingdom and other partners on bilateral aid packages, according to Marchenko.
Together with the expected assistance from the International Monetary Fund, which is expected to conduct an evaluation by March, Ukraine can raise a total of $ 2.2 billion in support this year from international donors.
“We are not alone and I hope that this year we will be able to fight all possible situations,” Marchenko said.
Source: Capital
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