Tue, Dec 30, 2014 - Page 15 News List

Ukraine passes austerity budget

Reuters, KIEV

Ukrainian Prime Minister Arseny Yatseniuk, right, reacts during a session of the nation’s parliament in Kiev yesterday.

Photo: Reuters

Ukraine’s parliament yesterday backed a budget for next year that it had been under pressure to approve to secure the next tranche of financial aid under a US$17 billion IMF loan package, Russia’s Interfax news agency reported.

Before the budget vote, deputies approved a series of austerity laws, including an amendment to impose additional duties on imports, that Ukrainian Prime Minister Arseny Yatseniuk said could prove unpopular with foreign trade partners.

Ukraine’s foreign currency reserves have more than halved since the beginning of the year to a 10-year low due to gas debt repayments to Russia and efforts to support its struggling hryvnia.

Yatseniuk said the budget could still be amended following talks with Ukraine’s Western backers.

“A series of articles will change depending on what we agree with international lenders,” Interfax quoted him as telling parliament. He said these discussions would start on Wednesday next week.

Voting was delayed as deputies debated amendments, with some saying they unfairly increase prices for Ukrainians, many of whom are struggling to make ends meet.

Ukraine’s foreign currency reserves stand at just under US$10 billion, barely sufficient to cover two months of imports.

One new law would add a 10 percent duty to taxes on food imports and an extra 5 percent on others, excluding strategic imports such as gas.

“Problems could arise with our trade partners,” Yatseniuk said, advising that the law should only come into effect once the government had consulted with international partners.

He said one of the main budgetary priorities is defense and security spending, which is set to total 90 billion hryvnia (US$5.69 billion).

A year of revolution and war with pro-Russia separatists has pushed the hryvnia to record lows and crippled the economy, which is forecast to shrink 4.3 percent next year.

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