You're reading: Financial Times: Ukraine’s fiscal conundrum

A deal with cash-strapped Ukraine was originally supposed to be the centerpiece of today’s “Eastern Partnership” EU summit in Lithuania. But last week Ukraine froze plans to sign the EU integration agreement in favour of overtures from Russia. 

The trade deal with the EU was expected to stimulate much-needed investment flows to Ukraine and exports via the removal of trade tariffs. But as this was contingent on reforms, benefits were likely to be longer term. A deal with Russia on the other hand – potentially a lowering of the price at which the country imports gas – could give a short term fillip to the economy.

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