Ukrainian PM Arseniy Yatsenyuk to visit Canada this week for economic talks

The prime minister of Ukraine will be in Ottawa this week for talks with the Harper government amid financial turmoil over the country's debt.
Ukraine Prime Minister Arseniy Yatsenyuk, left, will be in Ottawa this week for talks with Prime Minister Stephen Harper. The pair toured a training facility in Kyiv during Harper's visit there last month. (Adrian Wyld/Canadian Press)

The prime minister of Ukraine will be in Ottawa this week for talks with the Harper government.

Arseniy Yatsenyuk was to arrive Tuesday for talks that will focus on the eastern European country's attempts at economic and government reform.

A statement from Prime Minister Stephen Harper's office says it's an opportunity to reaffirm the close relationship between the two countries and they intend to "discuss ways to further broaden its scope."

The last time the two met was in Kyiv just prior to the G-7 Summit in early June when Yatsenyuk asked Harper to press allies for lethal military aid so that Ukraine could turn the tide against Russian-backed separatists in the east.

His visit also comes ahead of an anticipated announcement that Ukraine will default on debts owed to private creditors.

Ukraine faces a different situation than Greece, which has been bailed out by public bodies like the International Monetary Fund and the European Central Bank.

Different kind of debt crisis

Talks about restructuring the debt are underway, but the country faces a July 24 deadline to pay US $120 million to private bond holders, who are now being asked to accept half of what they are owed.

The country's parliament recently passed legislation that allows the government of President Petro Poroshenko to suspend payments to private foreign creditors while Ukraine's debt is restructured.

If the creditors don't agree, the government could simply default.

Right now, the country's debt chews up about 95 per cent of its gross domestic product and many observers, including the IMF, say that is unsustainable.

Unlike Greece, Yatsenyuk has repeatedly signalled the Ukrainian government is committed to reform.

Defence Minister Jason Kenney, the last high-ranking Canadian official to visit Ukraine last month, said he remains optimistic that a default is not on the cards.

"We certainly hope that doesn't happen," Kenney told The Canadian Press in Calgary during a recent interview. "We've assisted Ukraine in stabilizing their monetary situation through the International Monetary Fund. The most important thing for Ukraine is they get their economy growing and that's why they need stability."

He noted the Harper government is pursuing a free trade deal with the country and reform is already underway.

"We're getting close with the free trade agreement and frankly it's why Ukraine needs to fight corruption," he said. "In the short term, we hope they get through this — unlike Greece, Ukraine is actually making a very serious effort under the current government to bring in reforms. They're paying a political price for that and they're also contesting with a war inflicted on them by Russia, so it's a very challenging situation."