KIEV, Dec. 19 â€“ Parliament, led by the pro-government coalition, ignored key demands from President Viktor Yushchenko on Tuesday when it had voted to approve the 2007 budget, a senior aide to the president said.
Arseniy Yatseniuk, Yushchenkoâ€™s deputy chief of staff, said he will recommend the president to again veto the budget, a move that will most certainly lead to financial crunch next month.
â€śParliament is carrying out a forced scenario of pushing through the budget that is not acceptable for the society,â€ť Yatseniuk said after the vote. â€śIt canâ€™t be signed.â€ť
The development highlights an escalating standoff between the pro-Western president and the pro-Russian government over the countryâ€™s foreign and economic policies that may lead to a major political crisis.
Yushchenko vetoed the budget a week ago as he had urged the government to increase minimum wages and pensions, the spending that requires an extra $1 billion in 2007, according to the presidential office.
Yatseniuk said that shifting resources efficiently within the budget, for example by cutting state investments on building a new airport in Donetsk, would cut the required extra spending to $160 million.
But First Deputy Prime Minister and Finance Minister Mykola Azarov, Ukraineâ€™s economic tsar, said that accommodating Yushchenkoâ€™s demands would cost extra $2 billion in 2007. He argued that such spending would slow down the countryâ€™s economic growth.
â€śWhat happens is an example of profanation and irresponsibility,â€ť Azarov said. â€śBoys decided to play a war against their own country and against the Cabinet of Ministers. Nothing will come out of this.â€ť
The development shows that the president and the government made very little progress over the past four days while trying to agree on the budget following a meeting on Friday.
The government faces a deadline of Dec. 31 to approve the budget or otherwise it would face a financial crunch next month that may postpone a number of the countryâ€™s social projects.
Unless the budget is approved by Yushchenko, Ukraineâ€™s state spending in January will be limited to 1/12 of the spending the previous year. This means the government may be short of at least $400 million in January 2007.
The government has been apparently preparing for the worst-case scenario as it had planned to borrow about $300 million on international capital markets this month. The government planned to issue Eurobonds denominated in Japanese yens, according to the Finance Ministry. (tl/ez)