Biden tells Ukraine terms for U.S. $1 bln loan guarantee

He reiterated the U.S. willingness to provide the loan guarantee when having a phone call with Ukrainian President Petro Poroshenko on Thursday.

"Regarding economic reforms, the Vice President reiterated the U.S. willingness to provide a third $1 billion loan guarantee to Ukraine contingent on continued Ukrainian progress to investigate and prosecute corruption and ensure that Ukraine's tax reform is consistent with its IMF program," the statement reads.

Biden also emphasized the need of the full implementation of the Minsk peace agreements and restoration of Ukraine's territorial integrity.

As UNIAN reported earlier, the U.S. government loan guarantee to the tune of $1 billion, which Ukraine may receive within a few months, will focus on the implementation of reforms in the economy and improvement of the investment climate.

In April 2015, the Ukrainian government started developing a new tax reform and new version of the Tax Code. The tax reform is one of the key reforms stipulated by the IMF, the country's key creditor. The draft budget for 2016 was expected to be based on the provisions of the new Tax Code. However, the Finance Ministry stated the existing tax base would be used as a basis when drafting the 2016 budget.

Currently, there are two tax reform drafts, the one developed by the government and the other prepared by the parliament. Both documents provide tax cuts. However, the document proposed by the government envisages a gradual reduction in tax rates and the increase of budget deficit to UAH 60 billion. The draft budget developed by the parliament is more liberal, providing a sharp decline in tax rates, which, according to analysts' estimates, can lead to a deficit of at least UAH 200-207 billion.