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$15 billion aid to Ukraine not a ‘gift’, Russia expects a 5% return

Published: December 19, 2013 | 12:34 pm
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Russia’s decision to invest $15 billion in ‘brotherly’ Ukraine, as well as grant a $7 billion gas discount was pragmatic and based on economic facts, President Putin said at his annual press conference on Thursday.

The economies of Russia and Ukraine are closely connected, with trade at $17 billion, and Russia’s “generous gift” to Kiev, as many dubbed it. In fact, it was a well thought out and pragmatic decision for Russia, Putin told over 1,000 reporters on Thursday.

Russia expects a 5 percent return on bond investments, the President said, which Ukrainian President Viktor Yanukovich confirmed in a separate press conference.

Russia will place $3 billion of Eurobonds by the end of this year, in addition to a temporary $7 billion gas discount, both financial buffers that will help Kiev avoid economic collapse. The bonds will be in circulation through January 1, 2016. Russia will use money from its $88 billion rainy-day National Welfare Fund.

VTB, Russia’s second largest state bank, will organize the bond placement on the Irish Stock Exchange, which according to Putin, was suggested by Ukrainian negotiators.

The deal will prevent Ukraine from defaulting on debts, and buys the country time to enact serious reforms to get its derailed economy back on track. Ukraine’s total foreign debt is $140 billion, nearly 80 percent of gross domestic product. Ukraine’s economy is expected to contract 1.5 percent in 2013.

Source: RT

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