Ukraine will not receive billions of dollars from international donors at least until next spring

Photo: UNIAN

The International Financial Donor Conference where the Ukrainian government hopes to receive US $15 bn is being postponed again. Previously the governments of Ukraine and European countries announced that it was scheduled for January-February 2015, while now it is more likely to be held in spring. By that time investors require that the Cabinet of Ministers show positive results and improvement of the situation in Ukraine.

EU demands

A source of Capital in the Cabinet said that at the moment the preparations for the International Financial Donor Conference that was scheduled to be held in January-February 2015 have basically been suspended. «At the moment, there are no talks about preparations for this conference in Kyiv at the start of next year. Europe has made it clear that the conference will not be held earlier than next spring,» the source said.

Director of the Policy and Communications Department of the Ministry of Foreign Affairs Yevhen Perebiynis told the publication that today it is difficult to define a specific date convenient for all countries and international organizations that will attend the conference. «Nevertheless, a specific date of holding the conference was never announced,» the official noted.

By the way, the representative office of the European Union in Ukraine that is coordinating organization of the conference confirmed that there were plans to hold the event at the beginning of 2015. «However, after the Ukraine-EU Association Council held a meeting in mid-December in Brussels which Premier Arseniy Yatsenyuk attended, there was not further talk about the possible date of holding the conference,» a source of the representative office assured Capital.

Also, at the council its members rejected the use of the term «donor». Instead, the conference will have the official name Conference for the Support of Ukraine. A source in the representative office of the EU in Ukraine emphasized that in order to set an exact date Ukraine must now fulfill a number of requirements of the EU. First and foremost, the Cabinet of Ministers is obligated to present a national strategy for the revival and growth of the country in 2015. Secondly, the country must pass the national budget for next year and make the first steps towards its implementation.

«For Europe it is important that it understands to which specific projects the money allocated at the conference will be directed. It is expected that the objective of the meeting is restoration of liberated cities in the Donbas region,» the source confirmed. Furthermore, earlier Vice Premier Volodymyr Groysman was engaged in the organization of the conference. After he became an MP in the Verkhovna Rada, the Ukrainian leadership did not delegate a new coordinator.

When the action program of the government was presented to the VR, Premier Yatsenyuk stated that the plan of restoration of the country and financial assistance in the amount of US $15 bn would be approved at the conference. Noteworthy, the holding of the conference was first discussed in the summer of 2014. At that time the plan was to convene international donors for a meeting in Brussels in October.

Alignment with the IMF

Earlier, the international foundations Open Society and International Renaissance Foundation established by American businessman George Soros announced their willingness to participate in the conference and render financial assistance to reform of the Ministry of Internal Affairs of Ukraine. Chairman of the Board of the IRF Oleksandr Sushko told Capital that the foundation is expecting to receive an invitation to the conference. He noted that the date of the event was postponed several times to wait until after the parliamentary elections in Ukraine and the forming of a new composite of the government. Sushko said the most recent postponement is associated with the necessity for the implementation of reforms for which funds will be allocated.

«The strategy and budget are documents that will be soon adopted. The second issue is the activity of the Cabinet of Ministers. I believe Europe is waiting for the results of the team of Premier Arseniy Yatsenyuk after 100 days in the office,» says Sushko.

In his turn, Executive Director of the Bleyzer Foundation Oleh Ustenko believes the decision on holding the conference will be made after the national budget of Ukraine is approved. He says Ukraine is closing out the year with a budget deficit equal to 12% of the country’s GDP. Based on this, not a single donor will invest money into a country that is incapable of supporting its economy. In this case, for potential donors a deficit of 6-7% of GDP is acceptable. «For the EU and the U.S. it is important to see a sharp decline in the barometer of populism in the country. Then it will receive financial support. If the government is living beyond its means, then even international financial institutions will not finance such huge deficits,» the expert said.