February 28, 2014 / 5:32 PM / 5 years ago

EU team to visit Ukraine to examine financial needs

BRUSSELS (Reuters) - A small team of financial experts from the European Commission will travel to Ukraine on Monday to assess exactly how much financial assistance it needs, EU officials said on Friday.

The team from the Commission’s directorate-general for economic and financial affairs is expected to meet Ukrainian finance ministry and central bank officials to determine what the country’s budget shortfall and capital needs are.

“The first thing we need to do is to understand precisely how much they need,” said a senior official briefed on the visit. “There are a lot of numbers being thrown around and it isn’t helping to clarify the situation.”

Ukraine has said it needs $35 billion over the next two years. But its shorter-term requirements are much less and are estimated to be around $4 billion, according to some EU officials.

The International Monetary Fund is also sending a team of inspectors to Ukraine to assess its longer-term needs.

“The financial situation of Ukraine is less dramatic than it seems. There is no immediate threat of default,” a second senior EU official said.

“They will need around 1 billion (euros) or so in the summer,” the official said, referring to bond redemption.

Officials said that once Kiev had reached a deal with the IMF, the EU could disburse an earlier promised amount of 610 million euros ($842.51 million) in aid. Together with the IMF loans, that would cover Ukraine’s needs.

EU officials said the 28-nation bloc could come up with another 1 billion euros in the next few months to cover any immediate needs if necessary, but a third official said that would require complex procedures involving the European Parliament, which will dissolve in mid-April.

For EU loans higher than the total of 1.61 billion euros, a more detailed assessment of Kiev’s needs would be needed and a proper assistance program signed, the second official said.

EU officials said some EU capitals might extend bilateral loans to Kiev, but that it was too early to name countries or amounts.

The United States on Monday offered financial assistance to Ukraine to complement an IMF loan program.

Reporting by Justyna Pawlak, Jan Strupczewski, Adrian Croft and Luke Baker; Editing by Luke Baker and Alistair Lyon

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