Concorde Capital Research: State budget 2013 - Cost cutting plan eases hryvnia and sovereign risk

The state spending plan proposed for 2013, approved by Ukraine’s parliament on Dec. 6, gives the impression that authorities are preparing to face 2013 challenges without reliance on IMF funding. The budget’s 7% yoy revenue growth plan looks feasible and its targeted general deficit (including a Naftogaz subsidy) of 4.5% of planned GDP is manageable. Against this backdrop, external funding is critical but looks achievable. Moreover, it is set to keep external public debt/GDP as low as 0.2x and points to some easing of pressure on the local currency in 2013.