KIEV – Ukrainian Prime Minister Mykola Azarov Wednesday voiced expectations of receiving $12 billion more as loan from Russia at the beginning of 2014 with $3billion out of the commitment of $15billion by Russian President Vladimir Putin having been transferred on Tuesday by Moscow.
“We expect the next $12 billion at the beginning of next year,” he said, while opening a session of the Cabinet of Ministers on Wednesday.
Last week Russia committed to bailout Ukraine by purchasing $15 billion of its sovereign debt after Kiev heeded its push not to enter into a free trade agreement with the European Union and instead opted to deepen economic ties with Moscow in a sharp foreign policy U-turn by President Viktor Yanukovich.
Russia told Ukraine on Tuesday it had transferred the first tranche of$3 billion tranche of the bailout, part of plans to keep Kiev firmly within Moscow’s orbit.
The debt deal, the latest development in the economic trade negotiations occurring in the ex-Soviet republic, has simultaneously helped the country avoid bankruptcy.
But the Ukraine government move has sparked major protests as a large number of people had hoped that Ukraine’s acceptance of a free trade deal with their European neighbors would ensure a more secure economic future and promote accountability within the government.
Hundreds of thousands of people have gathered every weekend on Kiev’s main square to demand the government’s resignation.
But President Yanukovich has largely ignored their demands and pressed ahead with the Russian rapprochement, securing, in addition to the bailout money, one third price discount on natural gas imported from Russia.
Azarov told journalists in Moscow on Tuesday that the Russian purchase of the first tranche of Ukrainian bonds would significantly strengthen Ukraine’s forex reserves and be a critical factor in stabilizing the country’s finances and economy and also resolving a number of problems facing the country.
“This is a very serious stabilizing factor for us. Thanks to the loan our ratings have been raised..,” Azarov said.
“In 2014 we intend to resume our trade and economic relations with the Russian Federation and to reach a level of at least 2011. For us it is very important because it means jobs, budget revenues. We need to implement at government level what the presidents have agreed upon”.
Ukraine’s current account and budget deficits have been growing for the last few years as the government stuck to Ukranian currency hryvnia pegged exchange rate and continued to subsidize gas and heating prices for households.
Azarov told the government meeting on Wednesday that Ukraine’s economy, which grew 0.2 percent in 2012, would remain flat this year.
While EU officials maintain that the deal is still on the table, acceptance of the Russian bailout suggests that Kiev is leaning towards signing a Kremlin-led customs union. Fellow post-Soviet states including Belarus and Kazakhstan have already joined or plan to join the union, but Ukraine has so far resisted.
Yevgenia Tymoshenko, daughter of the imprisoned Ukrainian former prime minister Yulia Tymoshenko, urged the EU to not turn its back on Ukraine.
“Without your support, we don’t even have a chance for relatively honest elections, a partly independent press, the remains of political and economic competition and most importantly there will be no hope for positive change,” she said