International Monetary Fund (IMF) is ready to provide Ukraine the third tranche of $ 3.286 billion, more than half of which again go to finance the budget deficit. Instead, the IMF demanded to revise the state budget: its capital expenditures, as well as grants and incentives will be reduced, and revenues from VAT, by contrast, increased. Kiev could not agree with the IMF, believe the experts, as well as the fall of the economy makes it impossible to fully finance the current expenditure budget.

Board of Executive Directors of the International Monetary Fund at the end of July to first days of August will complete the second review of the program of cooperation with Ukraine within the framework of stand-by agreement and will allot Kiev third tranche in the amount of SDR 2,125 billion (at the rate of the IMF on July 10, - $ 3.286 billion) , reported the Head of Mission Fund Dzheyla Pazarbaziolu. These recommendations have been made possible through the harmonization of the mission of the Fund, working in Kiev since 23 June, the National Bank and the Cabinet of Ministers of completing the second review at the technical level. Mrs. Pazarbaziolu joined the negotiations only on 30 June.

During the examination of the economic situation in Ukraine, experts of the IMF worsened the prognosis of the fall in GDP this year from 8% to 14%, inflation expectations have improved from 16% to 13% and enabled the Cabinet to increase the budget deficit from 4% to 6%. The growth of budget deficits caused by the necessity of funding shortfall NAK Naftogaz of Ukraine in the amount of 2.6% of GDP, while in the recapitalization of banks has spent 9.5 billion UAH of 44 billion UAH.

The reason for the revision of the forecast of GDP - a deterioration in the economic development of countries in I quarter, - says the release of IMF .- The most noticeable decrease in real GDP influence the rapid improvement in the balance of current account, but will weaken the situation of the government revenue.

IMF have called for a budget sequestration. According to the and. about. Minister of Finance Igor Uman, Cabinet will take steps to increase the additional revenue and reduce costs: The reduction in planned capital activities, the use of subsidies, streamlining of state orders, tax incentivesand preferences. It is vital that the Ukrainian authorities adopt all necessary measures, including the approximation of the period of presidential elections to keep the fiscal process in accordance with the targets program - says the release of IMF.

source in the Ministry of Finance reported that the inventory of benefits will affect imports such as energy-efficient equipment that would increase budget revenues by 2-3 billion UAH. The Government also details the commodity codes and expand the list of documents required for imports - customs officers to determine the real price of imported goods will require invoice the producer rather than a mediator. The goal is to improve the feed supplement #5 to the declaration of VAT and exclude the possibility of using the old business tax bills for the increase in requests for reimbursement of VAT.

Any adjustment by declarations to the application of old bills will rise to an exit check tax administration, together with the Ministry of Internal Affairs, - said the official. The new higher tax rates and excise taxes have not yet been scheduled.

Among other commitments - Review financial plan NAK Naftogaz Ukraine, the quarterly increase in the price of gas for the population (see page 5), the introduction of distribution accounts for businesses teplokommunenergo, transfer of the National Electricity Regulatory Commission functions determining the tariffs for housing and communal services reform tax and pension systems in 2010. Adoption of laws on the improvement of recapitalization of banks, their actual owners and strengthening the independence of the National Bank will help Kiev in November and December to receive the fourth tranche of SDR 2,5 billion ($ 3.87 billion). President Viktor Yushchenko has promised to sign all the laws that have been approved by Parliament to implement the memorandum of cooperation with the IMF.

How and when the second tranche, the Prime Minister Yulia Tymoshenko once again managed to convince the IMF mission to send more than half of the state budget. Of the $ 3.3 billion third tranche of $ 1.9 billion will be spent on repayment of external debts of Ukraine. At the same purpose in May, the Government has received from the IMF $ 1.5 billion in the same time, state budget-2009 provides for the return of foreign debts in 2009 amounting to UAH 12.93 billion ($ 1.697 billion).

Thus, the IMF gives Ukraine the calculation of external creditors in twice as many as needed. The memorandum is the wording: to send money to the budget, including the repayment of foreign debts. So, Cabinet itself distribute the remaining funds. Maybe debts Ukravtodor or Naftogaz , - told Kommersant source in the Presidential Secretariat. In August, the Government needs to settle eurobonds on $ 500 million payment to other state public debt before the end of the year - $ 170.5 million to support the fact NBU rate will receive only $ 1.4 billion

Experts believe that this is the best time to take such unpopular measures as cost-cutting budget and increase in tariffs for gas and utilities. All the more so that the responsibility for those steps shared with the IMF, Cabinet of Ministers, senior economist stresses Center CASE-Ukraine Vladimir Dubrovsky.

Before the elections the government can always say that it offers the fund, - he said. At the same time responsible for the increase in tariffs will be transferred to NERC, and the failure of the laws - the Supreme Rada, said Director of the Bureau of Economic and Social Research Valery Gladkiy.

Strengthening the independence of the National Bank will enable it to make more informed decisions, and its monetary policy would not be subordinated to the purpose of financing the budget. If a Central Bank is independent, its primary purpose will be targeting inflation and the competitiveness of the economy, - believes Mr. Smooth. At the same time, disclosure of the ownership of banks, experts do not consider a priority.

Since we have the right to property is not protected, it is better to hide this information, - said Mr. Dubrovsky. In his view, are the owners of the banks through the MPs could block the adoption of the law.

Economists do not agree with the decision of the Cabinet to reduce the cost of capital programs. Mr Gladkiy sure that the activation investprogramm should stimulate domestic demand and maintain the basic sectors of the economy:

To reduce these costs are not appropriate. But this is a forced step - that is why the Cabinet agreed to the arguments of the IMF. From the budget reductions will not деться - taxes and bank fees have been paid in advance, and in the II half of this threatens the Government non-compliance that could trigger a second wave of the crisis, - adds Vladimir Dubrovsky.

Natalia Nepryakhin

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