Bloomberg News

Ukraine Wants to Cut State Budget Deficit to 1% in 2013

October 17, 2011

(Updates with borrowing plans from fifth paragraph.)

Oct. 17 (Bloomberg) -- Ukraine’s government wants to cut the state budget deficit to 1 percent of gross domestic product in 2013 from 1.6 percent next year, Finance Ministry said.

The ministry sees the budget gap at 1.5 percent in 2014, the Ministry said in a statement on its website today. GDP may expand 4.5 percent in 2013 and 4.2 percent in 2014, the ministry said. The inflation rate may drop to 5.9 percent in 2013 and 5 percent in 2014, according to the statement.

Ukraine is relying on a $15.6 billion standby loan with the International Monetary Fund that has been on hold since March. The country, which needs to reduce the budget shortfall by raising utility bills, has received $3.4 billion of the loan so far.

The government of Prime Minister Mykola Azarov is planning to borrow 84.6 million hryvnia ($10.56 billion) in 2013 and spend 77.6 billion hryvnia to repay loans, according to the statement.

Borrowing plans for 2014 are 111.7 billion hryvnia, while 93.4 billion hryvnia will be spent to repay earlier loans, the ministry said.

The Cabinet will “prefer domestic sources to finance the state budget to ensure less dependency on foreign capital markets,” the ministry said.

The sale of state assets is expected to bring 10 billion hryvnia into the state budget in 2013 and in 2014, according to the statement.

The cabinet seeks to “expand” cooperation with the World Bank, the International Monetary Fund, the European Bank for Reconstruction and Development and other international financial organizations in 2013 and 2014, the ministry said.

--Editor: James M. Gomez

To contact the reporters on this story: Kateryna Choursina in Kiev at kchoursina@bloomberg.net; Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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