10:06 Sep. 12, 2016
Ukraine faces "huge fiscal risks," Finance Minister Danylyuk says
Ukraine's government needs to cut spending to steer the 2016 budget back to the goal agreed with international lenders, as delayed privatization and a weak economic recovery prevent revenue from keeping pace with costs, Finance Minister Oleksandr Danylyuk said.
The eastern European nation is seeking to restart the flow of funds from its bailout by securing two aid tranches from the International Monetary Fund, 600 million euros (USD 673 million) from the European Union and USD 1 billion in U.S. loan guarantees by the end of the year, he said.
"We had an unrealistic budget for 2016," Danylyuk, who replaced Natalie Jaresko as finance chief in April, said in an interview in London Saturday. 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 government is also trying to keep its budget deficit from surpassing the target of 3.7 percent of GDP agreed with he IMF last year. Ukraine's fiscal deficit widened to almost 50 billion hryvnia (USD 1.9 billion) in the first seven months of the year, compared with 2.3 billion hryvnia a year earlier, according to the Finance Ministry. While revenue rose 4.6 percent in January-July on an annual basis, spending jumped 21 percent.