Money for Ukraine? | MacroScope

Money for Ukraine? | MacroScope:

Russia’s next move remains the great unanswered question for Ukraine but there are glimmers that things might be starting to move elsewhere.

IMF chief Christine Lagarde said last night she would send a technical support team to Ukraine soon if Kiev makes a request. It can’t do so until an interim government is formed, probably tomorrow. That would be step one, but only step one, down the road to an international aid package.

The European Union’s foreign policy chief promised Ukraine’s new leaders strong international support but offered up no specifics and there will be no meaningful bailout until after elections slated for late May although EU budget commissioner Janusz Lewandowski said bridging aid of 1 billion euros might be available.

The situation is clearly urgent though the assertion from Kiev that money must come within two weeks looks overblown.
There is jockeying for position in Kiev with allies of newly freed former premier Yulia Tymoshenko trying to take key positions and opposition leader and ex-world boxing champ Vitaly Klitschko declaring he would run for president. The formation of an interim administration will be the main internal focus for now.

The initial relief rally in Ukrainian assets has fizzled out. The hryvnia never got a lift, partly because the country’s limited reserves are probably going to have to be devoted to meeting international debt payments to avoid default leaving little to defend the currency. And Monday’s Ukrainian bond rally ended abruptly yesterday and went into reverse.

The hryvnia fell more than 6 percent on the day and if it can’t be propped up by the central bank, that raises currency risk for investors. There is also the possibility of debt restructuring as with the euro zone and what conditions the IMF will apply to any help, should it be forthcoming. So the initial market view that Yanukovich’s ouster had made default much less likely has now been clouded by a range of concerns.

There are others besides. Acting president Oleksander Turchinov expressed concern about threats to the country’s unity in mainly Russian-speaking Crimea, following protests there against the leaders who have taken charge in Kiev.

Both Russia and the West, while competing for influence, have said publicly that they do not want a split. But Russian foreign minister Lavrov, who has been talking tough, is out again calling for international condemnation of “nationalist and neo-fascist” sentiment in western Ukraine and attempts by nationalists to ban the Russian language.

'via Blog this'