Business New Europe: Russia calls on EU to show money for Ukraine gas
(Business New Europe – bne.eu – October 29, 2014) Russia’s ambassador to the EU Vladimir Chizhov called on the EU to show Russia it has the money to pay for Ukrainian gas, before Russia renews gas supplies to Ukraine, which were cut after a dispute over pricing and arrears. The EU is set to disburse nearly $1bn by the end of 2014 in loans to Ukraine, and is looking to raise a bridge loan for the country.
“Where is the money?” I sincerely hope that the money will be shown this time,” Chizhov told Interfax, adding that he expected Ukraine to receive a bridge loan from the EU, because the next IMF tranche would be paid to Ukraine only in February 2015.”
Delay in payment of the next IMF tranche to Ukraine were confirmed by Ukraine’s finance minister at a conference in Kyiv October 29. Finance Minister Oleksandr Shlapak said that the next tranche could only be expected in 2015, because Kyiv would need time to form a new government capable of holding talks with the IMF.
Senior EU officials told the Wall Street Journal that it is preparing to disburse two loans of Û500mn and Û260mn by the end of 2015, which will help Kyiv pay debts to Russia’s Gazprom for past gas deliveries. The funds were agreed in the first half of 2014 as EU support for Ukraine having successfully launched a reform program. Final confirmation needed for disbursal of the Û500mn loan will depend on the International Monetary Fund approving Kyiv’s budget for 2015 as realistic, as well as EU approval of strengthening of Ukraine’s audit chamber to cover state companies. The funds come in addition to around Û850mn in loans already provided to Ukraine by the EU.
But these funds still won’t suffice to make advance payments for winter supplies needed to resume gas deliveries from Russia. “We have to find a way to bridge the gap in the meantime, from about November to February,” German chancellor Angela Merkel told reporters in Berlin October 24, as quoted by Interfax.
Kyiv must pay Gazprom $3.1bn by the end of the year to settle arrears, and pay $1.6bn in advance for winter supplies of gas. According to the WSJ, the EU has approached the World Bank and European Bank for Reconstruction and Development to raise funds for a bridge loan for Ukraine.
