The IMF mission to stay one more week in Kyiv
The IMF mission, which arrived in Kyiv on January 12 and was expected to finalize its work on January 29, will stay one more week in Kyiv, media reported. In our opinion it is a positive signal. After crazy budget 2015 the authorities approved in late December 2014 it is good the parties still have something to discuss. As expected the talk with Ukrainian authorities is very tough. In particular, the Finance Minister Natalie Jaresko informed that the IMF demands stronger spending cuts. In our opinion the IMF mission will outline a list-to-do for the Cabinet as a precondition for next wire (the same way as it happened in August 2014). If the authorities start cutting budget promptly after the mission departs there will be a chance to receive funding in early March. At the same time, internal political resistance to austerity measures might impede to implementation of the plan. As regards to WSJ information about Lazard and potential restructuring. In our opinion it makes sense to do something with $3 billion of Russian debt (like recognizing it an odious debt). While other sovereign liabilities for this year are not that high to bother about restructuring manipulations. Against this backdrop we treat the message about Lazard as an attempt of the Cabinet to check potential options rather than an indication about some final decision on restructuring.