Ukraine and the USA sign an agreement on loan warranties for Ukraine amounting USD 1 billion

6/3/16

On June 3, the Governments of Ukraine and the USA signed an agreement on loan warranties for Ukraine amounting USD 1 billion. The agreement had been negotiated by the political leaders of Ukraine and the USA. On behalf of the Ukrainian Government the agreement was signed by Minister of Finance Oleksandr Danylyuk, on behalf of the US Government it was signed by US Ambassador to Ukraine Geoffry Payett and entitled representative of the USAID mission Joel Sandefour. Thanks to this agreement, Ukraine will have more leverage to support and protect the its vulnerable citizens against the impact of economic factors.

The loan warranty agreement is a part of the bi- and multilateral economic support for Ukraine comprising the four-year IMF program (Extended Fund Facility). It reflects increasing support for the economic reforms pursued by the Government of Ukraine. The agreement is aimed to support economic reform programs of Ukraine which are also supported by the IMF, USAID and other members of the international community. It should also facilitate access of Ukraine to the international capital markets.

USD 1 billion which will be received from bonds issued with the US loan warranty will be transferred to the state budget. These funds will be used for the social aid to the most vulnerable citizens to protect them against economic impacts including the adjusted gas prices.

“On behalf of the Government and the Ukrainian people I want to thank the USA for their permanent and sustainable support. This agreement on loan warranties is important for our economic support and protection of financially vulnerable citizens”, Minister of Finance Oleksandr Danylyuk said.

This is already the third loan warranty received by Ukraine from the USA. The previous two warranties granted in 2014 and 2015 enabled Ukraine to obtain USD 2 billion on the international capital market at a record low interest rate and to use them for the implementation of the reform program.

Key facts:
- emission of Eurobonds amounting USD 1 billion;
- maturity period – 5 years (till 2021);
- record low expected interest rate (not higher than 2% p.a.) – the lowest interest rate in the history of Ukraine.

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