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To meet IMF requirements, Ukraine need to cut budget spending in 2016 - Finance Minister

To meet IMF requirements, Ukraine need to cut budget spending in 2016 - Finance MinisterUkraine’s government needs to cut spending to steer the 2016 budget back to the goal agreed on with international lenders, as delayed privatisation and a weak economic recovery prevent revenue from keeping pace with costs, Finance Minister Oleksandr Danylyuk told to Bloomberg.

“We had an unrealistic budget for 2016,” Danylyuk, who replaced Natalie Jaresko as finance chief in April, said Saturday in an interview with Bloomberg in London. He declined to specify what areas may be targeted for budget cuts. “There are huge fiscal risks and I’m working every day to reduce them.”

The Ukrainian government is trying to keep its budget deficit from surpassing the target of 3.7 percent of GDP agreed on with the IMF last year. The gap widened to almost 50 billion hryvnias ($1.9 billion) in the first seven months of 2016 from 2.3 billion hryvnias a year earlier, according to the Finance Ministry. While revenue rose an annual 4.6 percent in January-July, spending jumped 21 percent.

“To restore the relationship with the IMF, to renew external financing - that was a priority for me and I can put a tick mark there,” he said to Bloomberg. “The next priority is to put in a foundation for irreversible reforms for next year. That’s what takes up all of my time.”
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