Friday, February 20, 2009

Ukraine's Prime Minister Says She Is Ready To Change Budget Amid Pressure From IMF

KIEV, Ukraine -- Ukraine's Prime Minister Yulia Tymoshenko said Friday she was ready to amend this year's budget to satisfy requests by the International Monetary Fund, which has said spending must be reduced before the country can receive an emergency loan.

Ukraine's Prime Minister Yulia Tymoshenko.

The IMF froze a hard-won $16.4 billion loan earlier this month after the government refused to trim the budget deficit to 1 percent of GDP from the current 3 percent.

Tymoshenko, expected to run for president in an election in January 2010, is reluctant to upset voters by cutting social spending.

Addressing the mayors of Ukrainian cities Friday, Tymoshenko said she was ready to amend the budget, but sounded vague about whether the changes would mean a reduction in the deficit. Her office declined to elaborate.

Tymoshenko asked the mayors to come ahead with proposals to "expand" regional budgets and said the government should continue subsidizing utilities for the public. But she also told the regional leaders to cut corners and "count every last copeck."

Meanwhile, her fierce political rival President Viktor Yushchenko warned that the economy was in a free fall. Yushchenko again urged Tymoshenko to trim the budget in order to continue receiving the IMF aid.

Ukraine is among the countries worst hit by the global financial crisis. The economy is expected to contract by 6 percent this year, according to analysts, after years of impressive growth.

Industrial output slumped by 34.1 percent in January, year-over-year, the biggest fall in the country's history.

The national currency, the hryvna, lost 40 percent since the financial crisis hit in September. It continued sliding Friday, closing at 8.52 to the dollar at the foreign currency exchange Friday. The Ukrainian stock market has hit the lowest point in four years.

Source: AP

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