KIEV, Dec. 19 ??“ 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, Yushchenko??™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.

???Parliament is carrying out a forced scenario of pushing through the budget that is not acceptable for the society,??? Yatseniuk said after the vote. ???It can??™t be signed.???

The development highlights an escalating standoff between the pro-Western president and the pro-Russian government over the country??™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, Ukraine??™s economic tsar, said that accommodating Yushchenko??™s demands would cost extra $2 billion in 2007. He argued that such spending would slow down the country??™s economic growth.

???What happens is an example of profanation and irresponsibility,??? Azarov said. ???Boys decided to play a war against their own country and against the Cabinet of Ministers. Nothing will come out of this.???

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 country??™s social projects.

Unless the budget is approved by Yushchenko, Ukraine??™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)