Ukraine PM plans more social spending

Ukraine’s parliament on Friday examined the new government’s revised 2005 budget, which foresees more revenue but also a larger deficit to fund big increases in benefits and wages a year before elections. The new administration, put in place after Viktor Yushchenko won last year’s presidential election, is grappling with huge social obligations undertaken by its predecessor. Restoring financial discipline and passing a budget with only a modest deficit are key to investors. Prime Minister Yulia Tymoshenko clearly has her eye on a March 2006 parliamentary election, with plans to raise wages, pensions and benefits to orphans, mothers and the handicapped. Tymoshenko wanted deputies to pass the draft in a single reading. Budgets generally must pass through three readings. With benefits aimed at the 70 per cent of Ukrainians coping with big financial difficulties, virtually no one in the 450-seat assembly openly opposed the draft. Speaker Volodymyr Lytvyn predicted approval by the end of the day. But several members objected to sweeping government proposals to eliminate all tax breaks in order to raise revenue. Finance Minister Viktor Pynzenyk told the chamber the deficit had been raised to 6.8bn hryvnias ($1.3bn) or about 1.6 percent of GDP from about 5.5bn hryvnias deficit planned in an earlier draft.