Brussels is reportedly concerned that Kiev could default on a €1.5 billion loan
© Getty Images / Grazyna Myslinska
The European Commission has blocked a loan to Ukraine, citing concerns over the country’s ability to repay, Bloomberg reported on Thursday.
The €1.5 billion ($1.52 billion) loan was offered to Kiev by the bloc’s lending arm, the European Investment Bank (EIB), to help the country keep its economy going. However, the European Commission’s budget unit blocked the move because of “concerns” over Ukraine’s “financial reliability,” Bloomberg quoted unnamed officials as saying.
The commission wants provisions at 70% of the total funding instead of the usual 9% for operations outside the EU, Bloomberg explained, in case Ukraine defaults on its debt.
The Ukrainian government said earlier this month that it expected the country’s post-war reconstruction to cost $750 billion. According to the EIB’s estimates however, Kiev may need as much as $1 trillion in outside assistance.
In May, the Group of Seven (G7) leading Western economies pledged nearly $20 billion in aid to Ukraine, however Germany’s finance minister later ruled out any joint EU borrowing to help cover the cost. According to Bloomberg, the EU has been struggling to agree even short-term financing to enable Kiev to pay its current expenses. Last week’s proposal of €1 billion ($1 billion) stalled as Germany blocked a larger package of nearly €9 billion ($9.1 billion), the publication said.
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