Ukraine President Yanukovych signs long-awaited budget bill

Apr 29, 2010, 11:27 GMT

Kiev - Ukrainian President Viktor Yanukovych on Thursday signed a long-awaited national budget bill, which plans for increased spending and a renewal of foreign credits.

The legislation passed by parliament on Wednesday plans 40.8 billion dollars of government spending in fiscal year 2010, an 18.7 per cent increase over 2009 spending.

The allowed budget deficit was 7.3 billion dollars, or 5.3 per cent of expected 2010 GDP.

The budget also set a maximum limit to government debt during 2010 at 38.3 billion dollars. That number, if reached, would be a 46 per cent increase of Ukraine's national debt during 2009, the Interfax news agency reported.

International Monetary Fund (IMF) officials in recent talks with the Ukrainian government made the passage of a budget bill with a 6 per cent budget deficit, or less, a key condition for obtaining further IMF financing.

The IMF in October 2009 froze an emergency credit programme to Ukraine, citing Kiev's unwillingness to cut budget deficits and remove state price supports to energy.

Ukraine's 2010 budget planned a renewal of IMF credits during 2010, with at least two billion dollars in IMF credits to be sent Ukraine by the end of December.

Substantial foreign aid also is programmed for road repair, with the European Bank of Reconstruction and Development (EBRD) and the World Bank slated in the budget to provide Ukraine some 225 million dollars in financing for overhauls to the road infrastructure.

Ukraine's economy shrank by some 15 per cent during 2009, making the formrer Soviet republic one of the world's worst hit by the international financial crisis.

Anna German, a senior Yanukovych spokeswoman, in Wednesday comments to the German News Agency said the administration was confident increased spending planned by the 2010 budget would be possible because better management of government funds, and renewed growth in Ukraine's key metals, agriculture, and machine-building sectors.

Infighting in Ukraine's parliament during the latter half of 2009 stymied almost all legislation, including the 2010 budget bill.

Yanukovych's inauguration in February was followed by a reshuffling of parliament factions, and political factions loyal to Yanukovych have held a reliable majority in the legislature since March.