Natalia Zinets, Karin Strohecker

LONDON/KYIV – Ukraine has been working together with other Western countries to unlock billions in financing to strengthen its financial position. The country’s finance minister stated that the International Monetary Fund is being considered for another agreement.

Serhiy Marchenko, the head of the Ukrainian government, told Reuters that his government is in bilateral talks with Washington to create a vehicle to permit the United States to transfer the International Monetary Fund’s reserve assets to Kyiv.

Marchenko stated that they were discussing “a very advanced tool” which could help with SDR allocation in a video interview from Kyiv.

Marchenko stated that this was only one initiative to aid Ukraine with reducing the negative effects from conflict with Russia. Russia already has over 100,000 troops at its eastern border, sparking concerns in Western capitals about Russia trying to invade Ukraine. Moscow denies any plans to invade Ukraine.

Marchenko stated that he hoped Congress would soon approve the $1 billion guarantee announced Monday by U.S. Secretary Anthony Blinken.

Marchenko said, “The process is very easy…U.S. Guarantee means we can borrow with an A- rating,” and added that funds from the loan would be in place before year’s end.

MORE BOND-BUY BACKS POSSIBLE

Kyiv also expects to be able to borrow the first half of a European Union loan worth 1.2billion euros by April. A loan from Canada was granted in March. Marchenko also said that Japan is in negotiations with the government for financial assistance.

He stated, “We can finance our deficit with sufficient finance and we will be able also to support our currency.”

Ukraine now relies on Western capitals as well the IMF for funding after its yields on sovereign dollar bonds rose above 10% earlier in the year due to Russia’s increasing tensions. Investors abandoned Ukrainian bonds which effectively closed the country off of the international capital market.

Kyiv also hopes to obtain the $2.2 billion remaining under the IMF agreement it has with the country before its programme ends in June. A mission of the IMF is scheduled to arrive in Kyiv this month for negotiations. If successful, $700 million could be dispatched. The remainder will come due afterward.

Marchenko also stated that the government would like to reach a deal with IMF. But, these talks would not begin until the second half year following the successful completion of the current program.

He said, “Our interest in such a programme is.” The time at which we begin this conversation will determine when, how and where we settle the matter.

As it had done in the past, he said that the government would use any declines of bond prices as a way to continue buying back its debt. He said, “If there’s an opportunity to do so, we will.” “But we need to pay our deficit first, and the most. Maybe then we will be able to decide.”

Marchenko spoke out about Washington’s and other Western countries’ plans to impose sanctions against Russia in the event of an invasion by Ukraine. He said that unity is key.

“If the countries are able to agree on severe sanctions it will be more beneficial for Ukraine to stop any Russian aggression.”