Ukraine, U.S. sign agreement on $1 bln in loan guarantees

The governments of Ukraine and the United States on June 3, 2016, signed the declaration of intent and the agreement on $1 billion in loan guarantees between Ukraine and the United States as part of arrangements between the two countries` leaders.
The document was signed by Ukrainian Finance Minister Oleksandr Danylyuk and by U.S. Ambassador to Ukraine Geoffrey Pyatt with authorized representative of the USAID mission, Legislative Officer Joel B. Sandefur, the Ukrainian Finance Ministry reported.
The loan guarantees agreement is part of bilateral and multilateral economic support for Ukraine comprising the International Monetary Fund`s four-year Extended Fund Facility program. It reflects increasing support for the economic reforms pursued by the government of Ukraine.
The agreement is aimed to support economic reform programs of Ukraine which are also supported by the IMF, USAID and other members of the international community. It should also facilitate access of Ukraine to the international capital markets.
Funds worth $1 billion, which will be received from bonds to be issued with the U.S. loan warranty, will be transferred to the Ukrainian state budget. They will be spent on social aid to the most vulnerable citizens to protect them against economic impacts including the adjusted gas prices.
”On behalf of the Government and the Ukrainian people, I would like to thank the United States for permanent and sustainable support. This agreement on loan warranties is important to our economic support and protection of financially vulnerable citizens,” Danylyuk said.
This is already the third loan warranty received by Ukraine from the United States. The previous two warranties granted in 2014 and 2015 enabled Ukraine to obtain $2 billion on the international capital market at a record low-interest rate and to use them for the implementation of the reform program.
The new eurobonds will be five-year bonds due in 2021, and an interest rate is expected not to exceed 2% per annum.
The agreement was signed in the presence of Ukrainian President Petro Poroshenko, the presidential press service reported.
The Ukrainian president said that signing the agreement would be greater efficiency of cooperation between Ukraine and the United States. The agreement was the result of his visit to Washington and his meetings with President of the United States Barack Obama and U.S. Vice President Joseph Biden. ”It is the evidence of the fact that the U.S. is a reliable strategic partner of Ukraine,” Poroshenko said.
Poroshenko says he is confident that the signature of the agreement on the allocation of $1 billion aid to Ukraine will be followed by the signature of the document on cooperation with the IMF, other financial institutions, as well as provision of macro-financial aid from the EU. ”It will facilitate economic development of Ukraine,” Poroshenko said.
”I am very grateful to the United States for such a timely and important aid for our state. I am sure that we will rebuild our state with the support of the global coalition,” he added.
According to him, as soon as the signature of the agreement on macro-financial aid has been announced, the world-famous international ratings agency Moody`s has immediately revised its forecast on the course of the Ukrainian hryvnia; Ukrainian securities have improved their position on the European market, which is a ”symbol of investors` belief in Ukraine.”
”Our today`s agreement is a common front of countering the aggression of Russia against Ukraine. They do not want and fear our success,” Poroshenko said.
U.S. Ambassador Geoffrey Pyatt in turn called the signature an important step of the president and new Ukraine on the path to stability and economic growth, an additional stimulus for reforms that are already being implemented and an evidence of fulfillment of commitments of the United States to the people of Ukraine.
”Signature of the agreement on loan guarantees is an evidence of noticeable and substantial progress of reforms in Ukraine that you, Mr. President, and the Ukrainian government have managed to achieve,” the ambassador said.
Pyatt also noted that the given agreement, just as the previous loan guarantees, would contribute to the implementation of the IMF programs. Ukraine has managed to conduct significant structural reforms over the past two years.

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