Economy: Aid & Deficits

Financial Times reports that banks will put $2billion into their Ukrainian subsidiaries, but the report notes that the IMF has not released the next tranche because of a disagreement over the budget deficit. The prime minister expressed confidence over getting the second tranche. The NBU head, PetroPoroshenko, downplayed the current situation with the IMF along with the sharp depreciation of the currency

In a related note, the prime minister has said that she does not want to review the budget.  Tymoshenko also said that its necessary to find a way to redistribute some of the costs in the budget. However, BBC Ukraine notes that the IMF is insisting on a review of the budget, currently at 3%. There will be no second tranche until the deficit goes down. Any changes will not take place until May, according to the government. The presidential secretariat says that it will hold talks with the IMF over the next disbursement, the president has already criticized the state budget. He also vetoed anti-crisis laws, which Tymoshenko labeled sabotage. .

The president and prime minister seem to be jockeying the same way they did when Ukraine was negotiating its gas agreement. While the president may be correct in criticizing the budget, how will his acts affect talks with the IMF? The president appears to be in no position to change the budget and one has to wonder what influence he can have over the government, especially the prime minister.  All he seems to be able to do now is obstruct and slow down the rest of government. 

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