Ukraine is searching for alternative financial loans
Taras Semenyuk, KyivStratPro
Volodymyr Zelensky’s visit to Brussels and London has crucial strategic importance for Ukraine. This trip is to two different capitals, each of which is essential in its own way for the Ukrainian long-term strategic perspective.
BREXIT has divided Great Britain and the EU; and from now, they are different and self-sufficient geopolitical territories. Actually, the UK’s leaving of the EU is advantageous for Ukraine only because the United Kingdom always has its own strategy and geopolitics. It is explained by the fact that, just for a moment, Great Britain is an imperial and maritime nation, where a fleet played a key role. If before it was necessary to look back at Brussels, now it is possible to conduct its own policy and build alliances with other countries.
Ukraine as a maritime state also has no more harmonious ally than Great Britain. Her Majesty's subjects understood the strategic role of the Black Sea long before today. It is enough to recall the Crimean War and subdued ambitions of the Russian Empire to access the Bosphorus to become clear that Great Britain has ambitious plans on the Black Sea basin. Hence, there is a willingness to invest in the reconstruction of the Ukrainian military fleet.
This, of course, requires funds, and London is also the financial capital of the continent. Therefore, it is not surprising that Marchenko, the Minister of Finance of Ukraine, held several meetings in the UK Export Finance (UKEF). Put simply, it is the Department of Export Credit Guarantees.
In fact, on this site, the head of the domestic Ministry of Finance discussed ways to obtain credit resources. Besides, similar meetings were held at the Bank of England and with “portfolio investors.”
To put it mildly, the cooperation of Ukraine and the IMF is far from being ideal. We are fulfilling our obligations to the IMF on the introduction and the implementation of reforms in not quite a clear manner. Thus, next and necessary credit tranches are still on pause. So, the Minister of Finance, Serhiy Marchenko, as a responsible person for budget execution, is actively searching for alternative sources for fund-raising for the Ukrainian economy in new markets.
It is understandable, as the best alternative for credits are investments; however, they are possible only if to stick to the clear anti-corruption rules and to have guarantors of macro-financial stability like the IMF and EBRD. By the way, a number of joint steps to prevent corruption and to cooperate in the efficient management in the public sector have been agreed with EBRD. It will be reflected in such projects as the privatization of state enterprises, some of which have already been successfully sold in a transparent tender.
In turn, the EU reaffirmed its strategic partnership within the Association. By the way, there is an ongoing discussion on the revision of the Association Agreement between Ukraine and the EU towards opening the so-called “industrial visa-free regime”, which, by the way, is initiated by Ukraine. In this view, we are finally growing up because we “dare” not to ask but to demand more than just visa-free travel for citizens. The economy should be thought of primarily.
The financial assistance of the EU is important, especially during economic decline following the COVID-19 pandemic. In general, the government manages to fulfill its budget obligations in the social sphere of the protection of Ukrainians. However, by the end of the year, a large burden on the budget is expected because it will be necessary to repay external debts equal to 3 billion US dollars.
The openness of top European officials at the Ukraine-EU summit is a signal of recognition that the technocrat government is fulfilling its obligations on the implementation of the plan under the Association Agreement, even though some so-called Ukrainian activists are dispersing a “betrayal” and the abolition of “visa-free” regime granted to Ukrainian citizens for European grants. Official Brussels informed that it was not going to abolish visa-free travel.