FROM AN INITIAL 610 MILLION EUROS OFFER TO AN 11 BILLION EUROS PACKAGE FOR UKRAINE

The demonstrations in Kiev began on the night of 21 November 2013, when protests erupted after the Ukrainian governmernt suspended preparations for signing an Association Agreement and a Free Trade Agreement with the European Union in order to seek closer economic relations with Russia. The president has asked for 20 billion USD in loans and aid. The EU was willing to offer 610 million euros in loans, while Russia was willing to offer 15 billion USD in loans. Russia also offered Ukraine cheaper gas prices. In addition to the money, the EU required major changes to the regulations and laws in Ukraine, Russia, however, did not.

Now EU money is ready to be poured into Ukraine and the EU is proposing to provide an 11 billion euros aid package in loans and grants over the coming years.

The package will include:

• 1.6 billion euros in loans under macro-financial assistance
• 1.4 billion euros in grants from the EU budget, of which 600 million euros can be disbursed in the next two years
• 3 billion euros from the European Investment Bank from 2014-2016 and a proposed trust fund in which EU budget money and bilateral money from member states can be pooled.
• Efforts with the European Bank for Reconstruction and Development, to which the EU is a majority shareholder, to release a further 5 billion euros.
• 250 million euros mobilised by the EC to leverage 3.5 billion euros of loans from bankable investment projects.

Conditions

The package is designed to assist a committed, inclusive and reforms oriented Government in rebuilding a stable and prosperous future for Ukraine.

Most disbursements will likely hinge on the formation of a new government in Ukraine, after the May elections and an agreement on wide-ranging economic reforms with the IMF. The fund will likely insist, among other things on a currency devaluation and a sharp rise of natural pas prices, which Ukraine subsidises heavily.

The EU package also foresees helping to modernize the country's gas transit system and providing technical assistance ranging from judicial reform to assistance in preparing elections.

The EU package also calls for steps to accelerate achieving visa-free travel for Ukrainians to the 28-nation bloc.

USA: The United States announced a € 1 billion aid package in energy subsidies.

Kiev estimates itr needs $ 35 billion in international rescue loans over the next two years. The IMF is expected to play a key role in providing those bailout loans.