KIEV, June 10 – A mystery deepened on Thursday over the source of $2 billion in cash that hit the Ukrainian government’s accounts Tuesday, with senior officials being either unaware or providing conflicting statements.

The money apparently arrived from the Russian state-owned bank, VTB, but the transaction had been kept secret until the money showed up on the accounts of the National Bank of Ukraine.

Any borrowing by the government in foreign currency is automatically converted to hryvnias by the NBU, immediately increasing the level of its foreign exchange reserves.

The secret transaction came into focus only after the level of forex reserves at the NBU suddenly increased to $28.5 billion from $26.5 billion on Wednesday.

Speculation on the market originally connected the money to a deal signed between Ukraine and Russia on Wednesday for the joint construction of two nuclear power reactors.

But later comments from officials generated conflicting statements leading to even greater controversy and raising questions about where the money has come from and for what reason.

“The decision on the loan from the Russian Federation has not been approved yet,” Iryna Akimova, President Viktor Yanukovych’s chief economic advisor, said at a press conference Thursday.

But after journalists confronted her on the fact that the money had hit the government’s accounts, Akimova said: “As of today I cannot either confirm or deny this information.”

“What’s the point to comment on something that has not been officially announced?” she said.

Deputy Prime Minister Serhiy Tyhypko, who is in charge of negotiations with the International Monetary Fund, confirmed the money had arrived, but was not able to immediately provide any details.

The Finance Ministry of Russia said Thursday no money has been approved and provided to Ukraine as a government-to-government loan.

Meanwhile, at least two sources in the government have reported that the money from Russia had nothing to do with the nuclear reactor deal, but had arrived to cover Ukraine’s budget deficit.

“This is different money,” a government official, who asked not to be named, told Unian news agency on Thursday. “It has nothing to do with the [nuclear reactor] deal.”

The money was provided as a loan at 6.7% annual interest rate for up to six months and was aimed at helping Ukraine to cover budget deficit, another government source told Ukrayinska Pravda online newspaper.

The loan may be extended every year for a total of not more than two years, the source said.

VTB, or Vneshtorgbank, is majority owned by the Russian government, with Russian Finance Minister Alexei Kudrin being the head of the supervisory council.

The lending for the $3.8 billion construction of the two nuclear power reactors in Ukraine was originally supposed to be provided by Sberbank, Russia’s largest bank.

But Mykhaylo Chechetov, a lawmaker from Yanukovych’s Regions Party, on Thursday insisted that the money was part of the nuclear power reactor deal.

Meanwhile, the arrival of the mysterious $2 billion from Russia comes as Ukraine’s talks with the IMF have stumbled over the government’s refusal to cut budget deficit and implement other economic reforms.

The government hoped to received at least $4.5 billion from the IMF in June to bridge budget deficit, but the lending was postponed due to the lack of reforms.

An IMF team is currently in Ukraine investigating whether the government has made any progress with the reforms before deciding later this month on whether to resume the lending.

Meanwhile, Tyhypko said earlier this week that should the talks with the IMF fail, Ukraine would have to turn to Russia for borrowing, or perhaps also to tap international capital markets. (tl/ez)