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Rada votes to approve 2007 budget draft
Journal Staff Report

KIEV, Oct. 31 – Parliament, led by the pro-government majority, on Tuesday voted to approve in the first reading the 2007 budget draft ending disagreements within the coalition and showing the government has been winning greater support.

The draft, which had been recently criticized by some coalition members, was approved by 256 lawmakers in the 450-seat Parliament after 19 opposition deputies had suddenly backed the bill.

The draft preliminary sets the budget deficit at 15.1 billion hryvnias next year, or 2.55% of the GDP, that will be financed through international and domestic borrowing. It should be approved by Parliament in three readings before the end of the year as Ukraine’s calendar year coincides with its fiscal year.

The government complied with President Viktor Yushchenko’s position by increasing spending on defense sector compared with the original draft that had been submitted to Parliament in September.

But the draft was criticized by the opposition leaders and by independent analysts for lack of transparency that may lead to corruption.

Viktor Pynzenyk, a former finance minister, said the government, due to increased tax pressure on businesses, may face serious problems with budget revenue collection by the end of next year. He said this may disrupt social payments.

Independent analysts said the budget may run into problems if steel prices decline on world markets. Steel accounts for more than a third of Ukraine’s exports.

“We question the durability of Ukraine’s budget position,” Timothy Ash, an analyst with Bear Stearns International in London, said. “If global commodity prices decline and growth slows, the Finance Ministry will face some big challenges on the budget front.”

Meanwhile, the vote in Parliament shows the government of Prime Minister Viktor Yanukovych has managed to build up some support from within the opposition groups, such as Our Ukraine and the Yulia Tymoshenko Bloc.

Roman Bezsmertniy, the leader of Our Ukraine, President Viktor Yushchenko’s party, said the group will get together on Thursday to see why 11 members had voted to back the draft.

The vote may be a sign that Our Ukraine, which goes through a serious leadership crisis, has been splitting with some of its members ready to join the pro-government coalition.

“I don’t believe in this so far,” Bezsmertniy said. “But let’s see.” (tl/ez)




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USD 27.11 27.12
RUR 0.457 0.457
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