Wednesday, December 18, 2013

Russia Gives Ukraine Cheap Gas, Multibillion Dollar Loan

Russia on Tuesday sharply lowered natural gas prices for Ukraine and provided its economically struggling neighbor with a multibillion loan package in a move that Ukraine’s government may hope will spell an end to ongoing street protests. President Vladimir Putin announced at a meeting with his Ukrainian counterpart in Moscow that Russia will sell gas to Ukraine’s Naftogaz energy company for $268.5 per 1,000 cubic meters, well below the current level of more than $400. Putin said, however, the price may only be lowered temporarily. “We believe this is a temporary decision, by which it is mean that long-term agreements should and will be signed. This concerns both supplies to Ukraine and securing uninterrupted transit to our consumers in Europe,” Putin said after the meeting. Russia will also dip into its national wealth fund to buy $15 billion in Ukrainian eurobonds, Putin said. That will provide desperately needed liquidity for Ukraine, which is currently facing a looming balance of payments crisis.

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