“We planned to allocate another tranche according to that arrangement. Yet in the current situation we have many questions as to how the money will be used and how it will be paid back,” said Russian Finance Minister Anton Siluanov, according to ITAR-TASS this morning.
- *RUSSIA URGES RESPECT FOR UKRAINE SOVEREIGNTY, LEGITIMATE GOVT
Russia has suspended another tranche of financial aid for Ukraine because of the current tensions and plans to wait until the situation stabilizes to resume support afterwards, Russian Finance Minister Anton Siluanov told Bloomberg on Friday commenting on the Irish Stock Exchange’s report on Ukraine’s refusal to sell two-year Eurobonds of $2 billion. Russia was to buy bonds under the already approved $15 billion aid package.
“We planned to allocate another tranche according to that arrangement. Yet in the current situation we have many questions as to how the money will be used and how it will be paid back,” said Siluanov.
Conditions for the second tranche were similar to those of the first, namely a two-year loan at a rate of 5 percent per annum, Siluanov added.
He also doubted the feasibility of currency interventions to support the hryvnia amid political instability.
“The national bank of Ukraine can now make efforts to bolster the hryvnia, but demand for foreign currency amid political uncertainty will remain high,” he said. “Therefore, interventions can prove a waste of gold and currency reserves that will lead to nothing and will not prevent the hryvnia’s devaluation.”
Of course, we suspect the “deal” does nothing to change their minds – especially as it increases the uncertainty of what the Russian aid will be used for.