Kiev - Ukraine's parliament on Friday passed a critical
budget bill, marking the first legislative success of a new three-
party ruling coalition.
A total 226 MPs in the 450-seat house - the bare minimum needed to
pass any legislation - voted in support of a 2009 national budget
planning politically painful social service cuts and other reduced
government spending.
The three parties assembling votes to push the legislation through
are a shaky alliance of pro-Europe MPs. The group tried and failed to
pass the same bill on Thursday.
President Viktor Yushchenko in recent weeks repeatedly called on
the legislature to pass a revised 2009 budget taking into account the
effects of the world financial crisis on the Ukrainian economy. He
must sign the budget bill to make it law.
A recent 16.5 billion-dollar loan from the International Monetary
Fund (IMF) imposed additional conditions on lawmakers, forcing the
legislature to include into the revised budget IMF-stipulated
monetary, banking, and fiscal targets particularly unpopular with
Ukrainian big business and rural residents living low fixed incomes.
Key features of the new budget include a maximum 3 per cent deficit
relative total GDP, government collections of 30 billion dollars,
spending of 36 billion dollars, annual GDP growth of 0.4 per cent, and
inflation of 9.5 per cent or less.
The new budget's terms, though built on reduced economic
expectations, nonetheless are according to government critics overly
optimistic, foreseeing Ukrainian economic growth next year and
inflation in the 10-per cent range.
The new budget bill's economic performance predictions are,
according to independent observers, unlikely to pan out in fact given
the Ukraine's shrinking industrial production, down 14 per cent over
November alone.
Other worrying areas include weakening currency and falling
international demand for industrial commodities making up the bulk of
Ukraine's export earnings.
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