European Commission Suspends $1.5B Loan To Ukraine

A loan of €1.5 billion to Ukraine has been denied by the European Commission (EC), the executive arm of the European Union. According to Bloomberg, which cited sources among EU officials, the decision was made by the EC’s budget section because of worries about the risks of lending to the country.

Kiev received a loan from the European Investment Bank (EIB), the lending arm of the EU, to help the economy of the nation. Loans made by the EIB outside of the EU are guaranteed by the EC, with collateral typically amounting to 9% of the overall funding. According to authorities speaking to the agency, the European Commission demands that the collateral for the loan to Ukraine equal 70% of the total sum.

They claim that the same stipulation was made for the previous $1 billion loan to Ukraine and that the EC is putting it forth in case the nation is unable to return the money to the markets. The European Commission must ensure it can cover losses in the case of a default by Ukraine, according to a spokeswoman for the organization. He claims that the EC is looking for alternate ways to divide the risks associated with loans to Ukraine among EU member states.

For Ukraine to be able to pay its employees’ salaries and other immediate expenses, the EU is attempting to negotiate short-term finance. The amount of emergency aid that the EU provides to Kiev has been temporarily curtailed. After Germany vetoed a nearly €9 billion rescue deal, a $1 billion bailout offer came to a standstill.

source: bloomberg.com

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