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Ukraine’s parliament passes budget for 2016 meeting IMF demands

December 25, 2015, 5:49 UTC+3 KIEV

A total of 263 MPs have voted in favor of the decision, above the required minimum of 226 votes

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© Mykhailo Markiv/Ukrainian presidential press service/TASS

KIEV, December 25. /TASS/. Ukraine’s parliament, the Verkhovna Rada, has approved the state budget for the next year taking into consideration amendments to the country’s tax legislation.

A total of 263 MPs have voted in favor of the decision, above the required minimum of 226 votes. The deputies spent almost the whole day inside the parliament in an attempt to agree on the budget

Gas price at $225

Under the document, the budget deficit in 2016 is expected to be at 3.7% of GDP and the spending at the level of 667.7 billion hryvnias ($29.1 billion), and the revenues at 595 billion hryvnias ($25.9 billion). Inflation will be 12% and GDP growth at 2%

The annual average exchange rate will be 24.1 hryvnias per dollar and the price of imported gas at $225 per 1,000 cubic meters.

Growing living wage

The minimum living wage next year will climb by 12.5%: on May 1, 2016 to 1,399 hryvnias ($59.5) and on December 1, 2016 to 1,496 hryvnias ($63.6). The minimum pay will also grow on May 1, 2016 to 1,450 hryvnias ($61.7) and on December 1, 2016 to 1,550 hryvnias ($65.9).

The pensions will also grow by 12.5% next year, Social Policy Minister Pavel Rozenko said. The budget envisages spending on the pension fund at 172 billion hryvnias ($7.31 billion).

IMF recommendations

Ukraine’s state budget for 2016 is based on a new draft Tax Code, as recommended by the International Monetary Fund (IMF). Both documents were presented in the parliament on December 17 and both came under criticism from nearly all parliamentary factions. As a result, the documents were referred back to the Rada’s tax and customs policy committee.

After a series of failed presentations of the budget and the Tax Code, the International Monetary Fund urged Ukraine to pass the budget in conformity with its recommendation otherwise it warned it would suspend the program of international financial assistance.

On Thursday, the MPs resumed the consideration of the changes to the Tax Code. The deputies decided to work "until the agenda of the day was fulfilled and to complete the work on adopting the budget." The session continued until 4.00 a.m. local time (02:00 GMT).

No applause

The vote on the budget came amid harsh criticism, with several factions saying they would not back the proposed document. The leader of Batkivshchyna (Fatherland) Party, Yulia Tymoshenko, said the budget is a "verdict" for the country as the document envisages "the destruction of the poor people."

The leader of Radical Party, Oleg Lyashko, who had opposed the proposed budget, finally backed the document although calling it "shameful."

The presidential faction, the Pyotr Poroshenko Bloc, backed the budget, but its leader Yuri Lutsenko acknowledged that the draft was far away from an ideal one. "I will not applaud to it. It is a very difficult budget, a difficult tax code and a difficult social package. But without it there will be no salaries, pensions and the development of business, and therefore the prospects for the country’s development," he said.

Ukraine’s optimist Yatsenyuk

Many experts forecast that amid the growing criticism of the government the proposed budget would be rejected. Prime Minister Arseniy Yatsenyuk thanked the MPs for approving the document.

"I remain an optimist, not just Euro-optimist but a Ukrainian optimist. We can carry out reforms, we can achieve results. Unity is the basis for our success and a strong European Ukrainian state," he said.

Parliament Speaker Vladimir Groysman said it is high time to reformat the cabinet of ministers.

"I think that reformatting the government and enhancing it with personnel is a timely issue as there are areas that see no significant progress. This is evident and people feel this," he said.

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