In Digest, Ukraine

By Henry Foy in Warsaw, Peter Spiegel in Brussels, Stefan Wagstyl in Berlin, Roman Olearchyk in Kiev, The Financial Times, Dec 15, 2014

European leaders are balking at providing additional financial aid for Ukraine despite an urgent need to fill a $15bn funding gap as criticism of Kiev’s reform efforts mounts. The International Monetary Fund has identified the hole in Ukraine’s public finances, prompting Kiev to seek assistance from European and other governments to avoid a possible default.

Addressing journalists on Monday, Valeriy Chaly, deputy head of Ukraine’s presidential administration, warned: “Without additional resources, it’s almost impossible to cover financial gaps . . . to conduct reforms and avert default.”

Ukraine must close the hole by the end of next month or risk its access to a badly-needed $17bn assistance programme it agreed with the IMF earlier this year. But officials in Warsaw, Brussels and Berlin are warning that the country’s failure to make tangible progress on economic reform makes increased assistance politically unpalatable. EU leaders are expected to discuss the $15bn shortfall over dinner on Thursday night at a summit in Brussels. Senior officials involved in the meeting’s planning said there was dwindling appetite for another EU financial assistance programme — on top of two existing ones — without concrete evidence that the new government in Kiev is moving on the reforms required under the IMF programme.

… Foreign ministers from the Visegrad Group of Poland, Hungary, the Czech Republic and Slovakia told Mr Poroshenko at a meeting in Kiev this week that the bloc would not provide more financial aid or support pan-European efforts to raise a bailout package without promises on reform.

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