US to offer more aid to nearly bankrupt Ukraine

The US government will provide up to $2bn in loan guarantees to Ukraine as part of an international endeavour to support the latter's economy, which is on the verge of bankruptcy.

Like other major donors to Ukraine, the US Treasury has said that the guarantees will be subject to the former Soviet republic remaining on track to meet the conditions of its International Monetary Fund (IMF) bailout programme.

Washington, on 13 January, said it will provide a $1bn (£659m, €848m) loan guarantee to Kiev in the first half of 2015, and work with the US Congress to provide an additional $1bn guarantee, but only if Kiev stuck to its reform agenda, Reuters reported.

IMF officials are in Kiev to discuss Ukraine's aid package, currently worth $17bn.

Ukraine is eager for the package to be bumped up as its economy has been pushed close to bankruptcy by a pro-Russian separatist war in the east and the government now faces huge debt repayments.

But the IMF and the European Union, which last week offered an additional €1.8bn to Kiev, fear that Ukraine could ditch some of its economic pledges, including reforming the banking and the energy sectors and battling corruption.

The cost of insuring exposure to Ukrainian debt rose to a new five-and-a-half-year high on 13 January, according to data from financial information provider Markit, amid fears the beleaguered country may have to restructure its debt.

Earlier, billionaire financier George Soros called on the West to boost its aid, listing steps towards a $50bn financing package he said should be viewed as a safeguard against an increasingly aggressive Russia.

Writing in the New York Review of Books, the Hungarian-born hedge fund manager identified the European Investment Bank, World Bank, the European Bank for Reconstruction and Development and an expanded IMF programme as sources of cash.

Ukraine's foreign currency reserves were down to just over $7.5bn at the beginning of this year, the lowest in a decade and barely enough to cover five weeks of imports.

Ukraine has received at least five IMF loans since the 1990s.