President Yanukovych's Move Lowered Ukraine's Risk of Default - Bloomberg

KYIV, Ukraine, November 27, 2013 /PRNewswire/ --

Ukraine's financial risks have been considerably reduced due to the stalled Association Agreement talks with the EU. Such was the analysis released by Bloomberg (agency) on November 25, 2013. The government's decision, although beneficial for the country's economy and international investors, as reported by the agency, has already resulted in a strong reaction from thousands of Ukrainian citizens who resent the idea of not signing the Association Agreement with the EU at the Eastern Partnership Summit in Vilnius on November 28-29, 2013.

According to Bloomberg analysts, Ukraine has to spend about USD 15 billion in debt payments within the next two years, besides which, Ukrainian debt is one of the five most risky credits in the world. Therefore, the improvement of the economic situation, the increase of credit rating as well as getting a financial assistance remain some of the top current priorities for the country.

It has been speculated that Russia would provide assistance, thus strengthening the creditworthiness of Ukraine should it choose to abandon the course of European integration. "Some investors are hopeful that a big Russian bailout is looming, with loans and cheap gas," said Timothy Ash, London-based chief economist for emerging markets at Standard Bank Group Ltd., as reported by the agency. Yet, in the long run Ukraine would have greatly benefited from signing the Deep and Comprehensive Free Trade Agreement with the EU noted Regis Chatellier, a London-based strategist at Societe Generale, reports Bloomberg. He, nevertheless, agreed that if Ukraine signed the agreement with the EU now it would face "sharp commercial retaliation from Russia."

Notably, on November 21, 2013, the Cabinet of Ministers of Ukraine decided to suspend preparations to sign the Association Agreement and Deep and Comprehensive Free Trade Area Agreement with the European Union, scheduled for November 28-29, 2013. Reportedly, the decision was based on economic reasons and did not mean that Ukraine had completely abandoned the European integration vector.

Suffice it to say, the volume of foreign trade turnover in 2012 between Ukraine and the EU reached about USD 50 billion and about USD 63 billion between Ukraine and the Customs Union member states.