Wednesday, 30 December 2015

Ukraine secures external financial support

The European Investment Bank (EIB) has approved EUR 400 million loan for Ukraine to co-finance agricultural sector projects by up to 50% with the balance coming from own costs, participating banks or other beneficiaries.

Therefore the loan, which has a term of 12 years, will contribute EUR 800 million and is potentially good news for Ukrainian farmers assuming it makes it that far.

To keep that EUR 800 million in context, Ukraine agriculture needs about USD 50 billion to bring it up to speed.

By the end of last week Ukraine’s parliament finally adopted tax amendments and the 2016 budget which were a requirement by the International Monetary Fund in releasing a crucial USD 40 billion assistance programme.

It is not entirely clear if the adoption of the laws was fully IMF compliant (probably not as its reported many MP’s basically rubber stamped their approval in order to catch their flights abroad for the holiday) in which case another round of voting will be required.

As this bailout is seen as crucial in keeping Ukraine’s pro-western ruling coalition afloat it’s unlikely IMF will not ratify it due course.

The implication for agriculture are not clear (at least I can't find the detail yet) but it was basically a choice between continuing favourable tax breaks or cutting them.