US Treasury Secretary Jacob Lew urges countries to contribute to Ukraine’s economic rescue

In a statement to the International Monetary Fund, US Treasury Secretary Jacob Lew has urged other countries to contribute more to the economic rescue of Ukraine.

Jacob Lew told the IMF that Ukraine’s “sizeable financing needs” meant other nations must add to its $1 billion (720 million euros) loan guarantee.

The appeal came as Ukraine’s interim PM Arseniy Yatsenyuk offered to devolve more powers to eastern regions.

Pro-Russian separatists there are defying the government.

Meanwhile, Washington on Friday announced a third round of sanctions against individuals it has linked to Russia’s annexation of Crimea.

The US Treasury said it had frozen the US-based assets of one former Ukrainian official, a Crimea-based energy firm and six Crimean leaders, including the chairman of the Crimea electoral commission and the mayor of Sevastopol.

Jacob Lew says the US is “bolstering the IMF program through a complementary aid package, which includes a $1 billion loan guarantee and additional technical assistance,” in a statement to the IMF.

“It is critical that the international community – multilateral development banks and bilaterals – take immediate steps to also support the IMF program by providing financing support, given the sizeable financing needs,” he adds.

The IMF announced a rescue package worth as much as $18 billion last month in a bid to aid Ukraine’s economy, and this has been bolstered to $27 billion with contributions from Europe and the US.

In exchange, the IMF has demanded from Ukraine strict government spending cuts and tax increases.

Ukraine is being squeezed by Russia’s decision this month to stop providing Ukraine with subsidized natural gas.

That discount had been agreed between Russian President Vladimir Putin and Ukraine’s then President Viktor Yanukovych, in which Russia also said it would buy $15 billion-worth of Ukrainian government bonds.

The IMF is also asking Ukraine to crack down on corruption and end central bank support for the Ukrainian currency.

Ukraine’s new government has said it needs $35 billion to pay its bills over the next two years.

Ukraine has not paid off its debt to Russian gas supplier Gazprom despite the passing earlier this week of a deadline for the nation to start reducing its debt. Gazprom says Ukraine owes it $2.2 billion.

European Energy Commissioner Guenther Oettinger told Austria’s ORF radio he was working on a plan to help Ukraine pay its gas bills to ensure its debts do not rise.

On Friday, President Vladimir Putin moved to assure the EU it would not cut off gas supplies. Brussels said it would stand with the new authorities in Kiev if the Kremlin carries out a threat to turn off the tap to Ukraine.

“I want to say again: We do not intend and do not plan to shut off the gas for Ukraine,” Vladimir Putin said in televised comments at a meeting of his advisory Security Council, the Reuters news agency reported.

Russia has turned off the gas tap to Ukraine before, in 2006 and 2009. As the 2009 row escalated, gas supplies to Europe through Ukraine were suspended for two weeks.

But Russia may be reticent about doing it again as it is dependent on revenue from EU customers.

Talks between Russia, Ukraine, the US and the EU – the first four-way discussions since the crisis began – are scheduled to take place on April 17 in Geneva.

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