FT: Ukraine’s finance minister urges donors to double commitment

FT: Ukraine’s finance minister urges donors to double commitmentUkraine’s finance minister has called for the US, EU and other donors to double their financial commitment to the conflict-torn country next year, warning that a $40bn rescue led by the International Monetary Fund would do too little to guarantee long-term economic stability.

In an interview with the Financial Times, Natalie Jaresko also warned that Kiev was not prepared to offer Russia any “special deal” over a $3bn bond that matures in December, insisting that it had to be a part of a debt restructuring agreed with other creditors over the summer.

The government in Kiev has won plaudits from the IMF and donors such as the US for making significant progress in implementing economic reforms, although the fund still expects the Ukrainian economy to contract 11 per cent this year. It also has promised an ambitious set of further changes including a forthcoming new tax code built around a flat rate of 20 per cent for corporate and personal incomes, VAT and payroll taxes.

But Mrs Jaresko said the government also needed more help from the international community to help finance infrastructure and other investment and demonstrate progress to its own citizens. And for that it needed greater bilateral help from donors such as the US which collectively have given $7.5bn to Kiev this year. The minister said that figure should be doubled with the new funds focused on encouraging investment in Ukraine.

“Ukraine has done a lot to prove to its international partners that we are going hard, that we can walk the walk,” she said. “I think that means that international partners ought to be able to raise their collective hands for us.”

That warning came ahead of a meeting on Friday to discuss the fate of that bond between Mrs Jaresko and Anton Siluanov, the Russian finance minister.

The discussion on the sidelines of the annual meetings of the IMF and World Bank represents the first direct talks between the Russians, who have been backing a rebel uprising in the east of Ukraine, and the government in Kiev to talk about what has emerged as a knotty problem for both the IMF and the Ukrainian government.

Kiev considers the Russian debt to be commercial and argues it should be treated as any other such debt involved in a $15bn restructuring earlier this summer. But Russia has insisted it should be treated as “official” debt, meaning any default on it would complicate the IMF programme now under way. Under its rules the IMF would potentially have to suspend its help to Ukraine if the government in Kiev missed the December payment.

Mrs Jaresko insisted Friday’s meeting with her Russian counterpart was simply part of a roadshow to discuss the restructuring with creditors. Her goal, she said, was to “depoliticise” discussions over the bond. Her hands were also tied, she said.

“We’re in a legal process. Right now I cannot do anything outside the legal process,” she said.

Source: Financial Times
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