Ukraine Backs IMF, Army Bills as OSCE Reaches Crash Site

Photographer: Anatolli Stepanov/AFP via Getty Images

Ukrainian President Petro Poroshenko, right, speaks to Prime Minister Arseniy Yatsenyuk after a parliamentary session in Kiev on July 31, 2014. Ukraine's parliament voted not to accept Yatsenyuk's resignation. Close

Ukrainian President Petro Poroshenko, right, speaks to Prime Minister Arseniy Yatsenyuk... Read More

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Photographer: Anatolli Stepanov/AFP via Getty Images

Ukrainian President Petro Poroshenko, right, speaks to Prime Minister Arseniy Yatsenyuk after a parliamentary session in Kiev on July 31, 2014. Ukraine's parliament voted not to accept Yatsenyuk's resignation.

Ukraine’s parliament backed bills to keep cash from a $17 billion bailout flowing and maintain funding to the army as an international team reached the site of the Malaysian jet crash for the first time in a week.

Lawmakers in Kiev also rejected the resignation of Prime Minister Arseniy Yatsenyuk, who’d sought to step down last week after the legislation wasn’t passed. Amid the pro-Russian insurgency in the nation’s east, Ukraine halted combat operations to allow Organization for Security and Cooperation in Europe monitors to get to the scene of the plane disaster after fighting blocked attempts in the last seven days.

“I said I won’t go down without a fight and I did it,” Yatsenyuk said today. “Ukraine didn’t default and will never default,” he said, referring to the IMF rescue.

The show of unity in Ukraine’s parliament will boost a government offensive to dislodge the separatists, who’ve overrun the country’s easternmost regions and are blamed by the U.S and its allies for shooting down Flight MH17. American officials may add to sanctions on Russian business after Europe blacklisted tycoons close to President Vladimir Putin in a bid to halt his backing for the rebels and free access to the crash site.

Bonds Rally

The yield on Ukraine’s dollar bond due 2023 fell seven basis points to 8.453 percent, the lowest in a week, data compiled by Bloomberg show. Russia’s ruble, this quarter’s worst-performer among 24 emerging-market currencies tracked by Bloomberg, weakened 0.4 percent against the dollar.

Ukraine is seeking to ensure the IMF maintains loan disbursements, with the economy shrinking 4.7 percent from a year earlier in the second quarter. The Washington-based lender’s board will meet next month on the next $1.4 billion tranche after a mission to Kiev recommended approving it.

Yatsenyuk had also insisted lawmakers don’t shut off financing for the military, which has been pegging back the rebels in its offensive that’s focused around the densely populated regional hubs of Donetsk and Luhansk. More than 1,000 people, including civilians, have been killed since the push began, the United Nations said July 28.

While hostilities were suspended today to allow OSCE access to the plane site, a “strong explosion” was heard nearby, according to Italian Foreign Minister Federica Mogherini. “I’m afraid that in the coming hours we could have further negative developments,” she told a Senate committee hearing in Rome.

Foreign Police

A foreign police mission to the site will begin tomorrow, Ukrainian President Petro Poroshenko said today after speaking with the prime ministers of the Netherlands and Australia, whose citizens were among the 298 that perished in the crash.

Representatives of Ukraine, Russia and the OSCE agreed today in the Belarusian capital of Minsk to ensure passage of monitors to the crash site, Ukrainian Deputy Prime Minister Volodymyr Hroisman said in Kiev. The group will continue talks next week, according to the OSCE.

As anger grows at the rebels’ control of the site, the EU agreed on July 29 to restrict the export of equipment for Russia’s oil industry, curb arms sales and bar state-owned banks from selling shares or bonds in Europe. It named the lenders affected today as OAO Sberbank, VTB Bank, Gazprombank, Vnesheconombank and Rosselkhozbank.

Putin’s ‘Cronies’

Yesterday, the EU froze the assets of Russian billionaire bankers Arkady Rotenberg and Yury Kovalchuk, who were among eight people added to 28-member bloc’s blacklist of individuals and organizations. Three entities -- Russian National Commercial Bank, weapons maker Almaz-Antey and airline Dobrolet -- also were added, according to the EU’s Official Journal.

The EU move is the bloc’s first strike against business figures described by European leaders as Putin’s “cronies” and aligns its policy closer to that of the U.S. The U.S. has imposed sanctions on three Russian lenders including VTB Bank (VTBR), as well as a state-owned shipbuilder, adding to restrictions announced two weeks ago.

“The screws are tightening on Russia from both the U.S. and the European Union,” said Fredrik Erixon, director of the European Centre for International Political Economy in Brussels. “They’re looking at escalating financial sanctions and this will eat into Russian state banks and state-related companies.”

To contact the reporters on this story: Kateryna Choursina in Kiev at kchoursina@bloomberg.net; Daria Marchak in Kiev at dmarchak@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net; James M. Gomez at jagomez@bloomberg.net Andrew Langley

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