The International Monetary Fund approved a new $3.9 billion bailout program for Ukraine to help stabilize the economy and help the government pay back its debts, according to President Petro Poroshenko, Bloomberg News reported. The board of the Washington-based lender agreed on Tuesday to provide the eastern European country with the first $1.4 billion disbursement. It’s part of the stand-by program which replaces a bailout that suffered long delays as the government failed to implement the reforms necessary to release the cash.
Ukraine’s central bank declared insolvent Kremlin-run lender VTB’s local subsidiary on Tuesday, ending a long-running struggle over the Russian state’s role in the country after the annexation of Crimea, the Financial Times reported. The National Bank of Ukraine said it would wind down VTB Ukraine’s operations after its Moscow parent “failed to comply with banking law and the [NBU’s] regulations” and “made no attempt to keep the bank solvent”.
A deepening row between Russia and Ukraine ignited by a naval skirmish at the weekend has sparked falls in both countries’ financial markets, the Financial Times reported. Ukraine’s government bonds issued in foreign currency faced significant drops in price, which sent yields rising. Yield on a 10-year dollar-denominated bond maturing in November 2028 jumped 38.7 basis points to 10.832 per cent, its highest level since issuance. A 15-year dollar bond that matures in September 2032 faced a similar rise in yield to 10.385 per cent, also a record high for the paper.
The International Monetary Fund on Friday announced it had reached preliminary agreement on a new $3.9bn assistance package for Ukraine, whose government hours earlier took the politically unpopular decision of meeting a key condition of the fund by raising household gas tariffs by 23.5 per cent, the Financial Times reported. The new 14-month programme has yet to be approved by the IMF’s executive board.