Ukraine turns to Russia for 5-billion-dollar loan

Ukraine officially turned to Russia asking for a $5 billion loan. However, the Russian government has not decided yet whether to provide Ukraine with such a loan or not.

Photo: Ukraine turns to Russia for 5-billion-dollar loan

Today Deputy Prime Minister and Finance Minister Alexei Kudrin said in a statement that the issue was being discussed at the Ministry of Finance. He gave no comments on Ukraine’s chances to receive the saying that the process of making the decision was at its early stage.

As far as loans to Russia’s other neighboring states are concerned, Belarus is now expecting to receive 500 million dollars as the second part of its loan from Russia.

It was earlier reported that Ukraine planned to receive a $5 billion loan from Russia to cover its budget deficit. Prime Minister Tymoshenko said in early February that discussions were underway with various countries so that necessary loans would be received on the governmental level to cover the planned budget deficits.

President Viktor Yuschenko, however, compared the negotiations with Russia for a $5 billion loan with the Molotov-Ribbentrop Pact between Nazi Germany and the Soviet Union in 1939. In this way Yuschenko accused Tymoshenko of betraying Ukraine's national interests, Interfax reported.

Asked about the extension of a $500-million loan to Belarus, an agreement on which was signed last week, Kudrin said the money has either been transferred or will be transferred within the next few days.

As Pravda.Ru previously reported the resumption of natural gas shipments, which was obviously good news for Ukraine, were quickly changed with bad news about the nation’s possible default. This conclusion comes from the report of US financial experts about the global state of economic affairs. In accordance with the report, Ukraine has the worst economic situation in the world.

Ukraine has been losing investor confidence speedily lately. The country has become the world leader in terms of the industrial setback, the upturn in inflation, the devaluation of the national currency and the fall of the stock market. The forecast for 2009 is rather gloomy: the economic growth will slow down to 2.1 percent, the unemployment will double to 6.4 percent, the inflation rate will remain on the level of 2008, whereas the GDP will become negative, UN experts believe.

The soaring growth of the yield of the Ukrainian state bonds, the volume of which totals $105 billion, testifies to a high probability of default too. The bond yield has increased to 30 percent during the recent four months. For comparison, the yield of the Russian state bonds made up 10.8 percent prior to the 1998 default. In addition, the prices on bond default insurance have had a tenfold increase in 2008.