Ukraine Delays Budget Presentation Amid ‘Extreme Conditions’

KIEV, Ukraine -- Ukraine will delay this year’s budget, needed to unblock an International Monetary Fund loan, as the government tries to negotiate a lower price for Russian gas imports, Prime Minister Mykola Azarov said.

First Deputy Prime Minister Andriy Klyuev

“The budget is being put together under extreme conditions,” Azarov said at a Cabinet meeting in Kiev today. “The previous government left Ukraine on its knees.” The 2010 budget has been delayed since October after lawmakers in the administration of ousted Prime Minister Yulia Tymoshenko were unable to commit to IMF-required cuts.

The budget, originally scheduled to be presented today, will be unveiled on April 12, First Deputy Prime Minister Andriy Klyuev told reporters after the briefing.

The former Soviet state’s $16.4 billion IMF loan has been suspended since November, jeopardizing Ukraine’s ability to service foreign debt, including payments for Russian gas that flows into Europe.

The formation of a new government sympathetic to President Viktor Yanukovych has supported investor sentiment and sent yields on government debt lower on anticipation the country may be close to resuming its bailout program.

Ukraine can’t afford to pay the $330 per 1,000 cubic meters of gas currently under discussion, Klyuev said.

“There are intensive consultations being held now at the expert level on the price for Russian gas imports in 2010,” he said. “I would not say Ukraine will make concessions” in exchange for gas price cuts. “We are talking about mutually profitable projects,” including machine building, ship building, and nuclear machine building, he said.

Source: BusinessWeek