Sweden in million dollar loan deal for Ukraine

Sweden in million dollar loan deal for Ukraine
Swedish PM Stefan Löfven and Ukraine President Petro Poroshenko. Photo: AP Photo/Sergei Chuzavkov
UPDATED: Sweden has offered Ukraine a $100 million loan (850 million kronor). The deal was announced by Prime Minister Stefan Löfven on an official visit to the country on Wednesday.

Ukrainian President Petro Poroshenko thanked the Swedish government at a joint press conference for the loan for Kiev's cash-strapped economy, one piece of a multibillion dollar package the country needs to avoid collapse.

"The Swedish government is taking care of the interest on this loan themselves," Poroshenko said, thanking Löfven for the decision and calling Sweden "a true friend of Ukraine" though without immediately clarifying the details of the loan.

"It is important to me to show support to the people of Ukraine. It is also important that Ukraine can manage financially and I urge other countries to do the same," Löfven told reporters at a press conference in Kiev.

The loan is connected to a new IMF support package. Ukraine's international partners are expected to put together an aid package worth around $40 billion over four years.

The cornerstone of that would be an IMF bailout of $17.5 billion over the next four years, with the IMF expected to make a decision later on Wednesday over the funding.

Analysts have said Ukraine has but a few months before its economy collapses, making the loan a crucial lifeline. Kiev says it has met all the requirements to qualify for the bailout by pushing through a package of draconian reforms in recent weeks which included tripling the price of gas for households.

The austerity measures come on top of an already crippled economic base where a lot of the country's industrial core in the east has either stopped working or was physically destroyed in the fighting with pro-Russian separatists.

A press release from the Swedish government on Wednesday said: "This loan, together with our political support for the country's autonomous path, independence and territorial integrity, will help to strengthen Ukraine."

The announcement is likely to put further strain on Sweden's relationship with Russia, who earlier this week hit out at Foreign Minister Margot Wallström, accusing her of putting forward a "one sided" view of Russia's ongoing conflict with Ukraine.

In the comments, posted on Facebook, the Russian Embassy in Stockholm claimed Sweden was one of the countries responsible for instigating the crisis which has been going on for more than a year.