Ukraine's parliament on Tuesday has put off the formation on a new government until Feb 27, delaying a vote in parliament that had been planned for today, in a move to allow more consultations, interim leader Oleksandr Turchynov said. On Monday, Turchynov, who was elected parliament speaker Feb. 22, stated that new government must be formed quickly so that Ukraine can look for as much as USD 35bn in financial aid to avoid default. Yesterday, the parliament ousted the head of central bank Ihor Sorkin and appointed Stepan Kubiv, the ex-chairman of Lviv-based VAT Kredobank, to head the NBU.
In the mean-time, with interim government admitting that Ukraine is on the verge of default, the question remains, of how the country will manage its depleting foreign reserves and repay debt. The investors are now looking for any signals from the West, IMF and Russia in regards to financial aid that can be provided to the country. The Russian officials stated that they doubt the legitimacy of transitional power setting, however, Russian PM Medvedev reiterated that Russia will stick to recent agreements with Ukraine, including the ones on the natural gas supplies. The terms and timeline of these agreements will be discussed with the newly formed government, "should one appear", Medvedev added. Earlier, Chairman of the Foreign Affairs Committee of the European Parliament Elmar Brok deemed that the EU may allocate EUR 20bn to Ukraine to hold reforms and avoid default of the country. The IMF has also stated that it is ready to help Ukraine, if the new government asks for advice or support, IMF Managing Director Christine Lagarde said on Feb 23.
According to Bloomberg, Ukrainian assets have gained from the momentum for financial aid, with the yield on the government's dollar bond maturing in 2023 declining 93 basis points, or 0.93 percentage point, to 9.26%, the lowest since Jan. 28 as of 5:56 p.m. in Kyiv on Jan 24. The UX Index (UX) of stocks rose 15%, the most since May 2010, while the currency, which is managed by the NBU, weakened 4.3% to 9.3500 per dollar.