Ukraine's budget deficit should be held to no more than 3% of GDP in 2010, President Viktor Yushchenko said.
Yushchenko spelled out his position on the 2010 budget in a letter to Prime Minister Yulia Tymoshenko.
The draft budget, which Yushchenko still hasn’t seen, is to be reviewed at a September 12 Cabinet meeting, the letter says.
Yushchenko urges that the budget parameters be set in accordance with “realistic macroeconomic forecasts and forecasts for the nation’s social development.”
The letter warns against further increasing Ukraine’s public debt and calls for “defining the projects that will be financed with loans under state guarantees,” the presidential press service reported.
The president urges “restoring the stabilization fund to its main function as a locomotive for investment in the economy and the impermissibility of scattering its resources on current demands in 2010. VAT refunds must also be financed in full, he said.
He also called on Tymoshenko to ensure the nation’s energy security in 2010 by balancing the cash flows at Naftogaz Ukrainy.
Supplemental revenue to the pension fund should be made “by introducing separate laws on special luxury taxes,” the letter says.
Yushchenko also called for full funding of Ukraine’s healthcare, education, culture and science needs, as well as affordable housing and preparations for hosting the European soccer championship in 2012.
“Budget policy must coincide with the state’s economic development priorities. Therefore I insist on the faithful execution of legal requirements relative to the mandatory submission to parliament together with the draft budget the draft of the state program for Ukraine’s economic and social development for next year.”
Under Ukraine’s understanding with the IMF, the state budget deficit for 2010 is not to exceed 4% of GDP.
At the end of August the IMF’s resident representative in Ukraine, Max Alier, said the IMF might halt cooperation with Ukraine if the authorities embark on an unjustified increase in the budget deficit, causing the economic situation to deteriorate further.
