Ukraine seeks aid to rebuild regions shattered by separatist war

Ukraine seeks aid to rebuild regions shattered by separatist war

KIEV/DONETSK Ukraine - Ukraine said on Wednesday it was confident of receiving further aid under a US$17 billion IMF bailout but appealed to Western institutions and donors for further cash and credit to rebuild the east, shattered by separatist conflict.

Prime Minister Arseny Yatseniuk told his ministers that the criteria laid down in the International Monetary Fund's programme had been met and he believed Ukraine was on course to secure soon a second tranche of US$1.5 billion.

The ex-Soviet republic received a first slice of slightly more than US$3 billion in May under a programme drawn up to help the ex-Soviet republic plug holes in its budget and settle a big foreign debt.

But Ukraine told international donors on Tuesday in Brussels that the Fund's bailout was not enough to bring about a full recovery because of the drain on the economy caused by the separatist conflict in eastern, Russian-speaking regions.

Pro-Russian separatists have been fighting government forces in the east since April in a conflict in which more than 200 Ukrainian troops have been killed as well as hundreds of civilians and rebels.

The surge of separatism followed political upheaval in Kiev which led to the ousting of a Moscow-backed president followed by Russia's annexation of Crimea.

The conflict has driven relations between Ukraine and Russia to rock bottom with Kiev accusing Moscow of supporting the rebels who have set up 'people's republics' and said they want to join Russia.

After losing a key stronghold, Slaviansk, to government forces at the weekend, separatist forces are now digging in the big industrial hub of Donetsk, a city of more than 900,000 people. They also remain strong in the city of Luhansk on the border with Russia.

"MARSHALL PLAN"

A Ukrainian deputy prime minister on Tuesday urged international donors in Brussels to support a "Marshall Plan" for economic recovery that the government will present at a donors' conference expected to be held in the autumn.

Taking up the same theme on Wednesday, Yatseniuk said Ukraine needed further aid to establish a functioning infrastructure on the border with Russia. The Kiev government has accused Russia of allowing fighters from Russia to cross the border with military equipment and hardware to help the rebels.

In addition, Ukraine wanted help to meet an estimated cost of 8 billion hryvnia (about $700,000) to rebuild roads and bridges, restore water and electricity supplies, and repair public buildings including schools.

Yatseniuk said Ukraine would also want donors help to work out a "post-rehabilitation" programme to regenerate the Donbass - an economically depressed region of decaying infrastructure in the key steel and coal industries - which has become the battleground for the insurgency.

Yatseniuk said he was expecting to meet later on Wednesday a visiting IMF mission which has been examining Ukraine's economic performance since June 24.

"We believe Ukraine has fulfilled the criteria which are written into our IMF programme and we should complete discussions and successfully receive the second tranche," Yatseniuk told a government meeting.

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