New EU Import Loan

The European Union granted Ukraine a loan of 150 million ECU ($181.8 million). Officially the loan is directed to support the Ukrainian balance of payments. According to Minister of Finance Ihor Mitiukov, the loan is granted to secure balance on the currency market and “the needs of Ukrainian importers.” The first installment (50 million ECU) will be transferred by the end of the year. The loan is granted for 10 years and will be used by the National Bank of Ukraine at its discretion.

Among the structural conditions of the loan there are cancellation of a discriminatory trade regime (prohibition of importing used cars over five years old) and cancellation of imported product certification. They also demand reforms of the banking sector, which means, according to some experts, that powerful banks will soon to come to Ukraine.

“According to my estimates, Ukraine already owes international creditors over $15 billion. This is a big threat. The loan of the European Union is aimed to serve the needs of our importers (although everyone knows we need to limit imports under the current crisis conditions), and I can call it nothing but a noose. We will use this money to buy foreign products, thus ruining domestic manufacturing. And this is what the government does, which should be taking care of domestic manufacturer!?” says Viktor Naidenov, Ph.D. in economics and Dikom Corp. analyst.