So, Ukraine has received the first $5 billion tranche from the $17.5b IMF deal. The whole loan package that includes loans from other entities is assessed at $40b. Yet, monsignor Poroshenko WANTS MOAR. It seems to me this is outright extortion. Their 2013 and 2014 budget deficits were 63 and 67 billion hryvnias (approx 5% of GDP), approximately $3 billion. As of end of 2014, Ukrainian government external debt amounted to $32 billion. According to FT, $15 billion of that sum will take a 40-50% haircut. Let's do the math, (40-(32-15)-15*0.5) = 15.5. 15.5/3 ~5. The $40b package would be enough to pay the debtors down and fund the 5% budget deficits for 5 years. Why would this not be sufficient if they sign under the IMF programme where the primary budget deficit is eliminated in one year by 284% gas price increase and cutting the social programmes? If they can truly eliminate the budget deficit in a year's time, a $7 billion USD would be sufficient to pay down the current portion of long-term debt (8b) at 50% haircut and fund a deficit for one year (3b). Now my personal opinion is that: 1) increasing gas prices and cutting social spending in a country with 100 USD monthly wages (albeit 50% shadow economy) isn't going to work politically 2) any sort of reform in a country ranked 142 out of 175 in corruption, where head of central bank reports that bank(er)s stole assets amounting to the whole budget deficit and members of parliament silence her down, isn't going to work 3) GDP fell down 7% in 2014 and expected to contract further 5.5% in 2015 and return to growth in 2016. The 2014 decline is heavily weighted by a 15.2% YoY decline in q4. If the crisis intensifies (either economic or in the east), I'd guess you can have a 5.5% decline in just 2015 Q1. 4) What's the point to fund local currency deficit with hard currencies when monthly inflation is 5.3% and trailing twelve month inflation is 34.3%? If 90% of domestic debt is already on the bank' balance sheets, they can sure take some more of it. Outcome: it will take many many years for IMF to get back the money if Ukraine really spends it.