Massive drop in Ukraine state collections

Kiev - State revenue in Ukraine plummeted in January due to a wide-reaching economic slowdown, a senior government official said Monday. Government income was down 80 per cent as compared to 2008, with no relief in sight, said Roman Besmertny, senior economic advisor to Ukrainian President Viktor Yushchenko. The single-month drop in real official collections was the worst since Ukraine's years of hyper-inflation in the early 1990s, he said. The Yushchenko administration last week predicted GDP contraction of 2-3 per cent over 2009, the first reversal of economic growth in the former Soviet republic since 1999. Besmertny called for a review of Ukraine's national budget, and drastic cuts to popular social programmes such as state support to retirees, and government subsidies to control retail bread prices. Ukraine's government is deeply divided on measures to deal with the effects of the world financial crisis. Ukrainian Prime Minister Yulia Tymoshenko, Yushchenko's inveterate rival for power in Ukraine's ruling centre-right government, on Monday blamed Yushchenko-appointed leadership at the National Bank of Ukraine (NBU) for the country's shrinking economy. Monetary policy is a tense bone of contention between Ukraine's president and prime minister, with Tymoshenko calling for a strengthened national currency, the hryvna, for increased purchasing power of Russian energy imports, and Yushchenko defending a weakened hryvna to support exports. Falling commodity prices on international markets have hit the country's economically-critical metals, chemicals, and food- processing industries especially hard. Ukraine's government has struggled to deal with the country's shrinking economy and rising unemployment, with the Tymoshenko- Yushchenko stand-off stalling most reform legislation.