“The first and most important part of our mandate is to advise the (Ukrainian) government on economic policy,” says Ricardo Giucci, team leader of the German Advisory Group. “As much as we can, we support and facilitate economic relations between Ukraine and Germany and the European Union.”
The group’s most recent study, in particular, provides a glimpse into the Ukrainian-Russian deal signed on Dec. 17. The deal, including a $15 billion package for Ukraine and a 33 percent discount for Russian natural gas, came when the country was facing substantial budget and current account deficits: $8 billion and $8.3 billion, respectively, and its foreign-exchange reserves were at a perilously low level of $18.8 billion.
Ukraine was no longer able to finance itself without external financial help and had two options – receive financing from Russia or the International Monetary Fund. When Ukraine received the first $3 billion installment of the Russian loan in December, it helped stabilize reserves. The gas discount could save the country up to $3 billion in 2014 alone, Giucci says. Still, he says Ukraine could benefit more from the International Monetary Fund deal.