Ukraine's FinMin Tenders Resignation

KIEV, Ukraine -- Ukraine's Finance Minister Viktor Pynzenyk has tendered his resignation in protest over a costly gas deal with Russia, leading Internet news site Ukrainska Pravda said on Thursday, quoting government sources.

Finance Minister Viktor Pynzenyk

Pynzenyk has criticized the agreement, which nearly doubled gas import prices for Ukraine, saying it endangered the 2006 budget. He is also running for parliament in the March general election as leader of a centrist political party.

Officials in the government and in the party contacted by Reuters declined to confirm or deny the report. Officials said Pynzenyk was at a meeting.

The departure of Pynzenyk, a reformer and defender of strict monetary and budget policies, may undermine Ukrainian financial markets, analysts said.

"This is a blow to this credit as Pynzenyk is seen as an orthodox market reformer, who has held the budget together in 2005-06 despite the deteriorating macro situation," Tim Ash, emerging markets analyst at Bear Stearns, said in a note.

Pyzenyk said earlier this week that the gas deal with Russia also threatened the solvency of state oil and gas company Naftogaz due to concerns the gas price could further increase.

Ukraine and Russia signed the new gas deal in the New Year. The accord raised import prices for Kiev to $95 per 1,000 cubic meters from $50 previously. Gas will be sold at $110 inside Ukraine to cover tax and transportation costs.

Kiev and Moscow are still wrangling on the details of the agreement.

Source: Reuters