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Ukraine has no urgent need to tap debt markets, Finance Minister Yuriy Kolobov said in Kyiv on June 13. He added that the country will have to go back to debt markets later in the year to raise another $2bn - an option some suggest it is unlikely to enjoy.

The claim comes as Ukraine paid off $1bn of previous Eurobond borrowing this week, despite the country's rapidly shrinking hard currency reserves, reports Bloomberg. However, analysts suggest that in view of the ongoing pullback in appetite for emerging market debt, Kyiv is not being realistic as it struggles to juggle its funding options to ward off asking either Moscow or Brussels for help.

Ukraine's international reserves decreased by 2.8% month on month in May to $24.5bn, the National Bank of Ukraine reported on June 7. Kyiv repaid $968m to the IMF during the month, and made $427m in coupon payments on its outstanding Eurobonds. At the same time, the National Bank of Ukraine recorded a higher supply of foreign currency as compared to the demand on the interbank FX market, reports Foyil Securities.

However, over the last few weeks the government has raised just over half a billion dollars by issuing local hard currency bonds to the population. At the same time Ukrainians have converted some of their hard currency savings in banks to take advantage of high yields on local currency accounts. It seems that the state, tapping into these two sources of dollar, has cobbled together enough to meet its obligations.

"I give up in terms of trying to figure out how the Ukrainians keep the show on the road," Tim Ash at Standard Bank wrote in a note. "They publish a cash balance close to nothing, are running a big budget deficit, have a wad of debt roll-overs still, and yet they imply they still have options. I guess we should expect VAT arrears to build, as in the past, but something has to give. Maybe this ultimately forces a near term deal with Russia over leasing the gas pipelines."