Cabinet suggests 5% of GDP deficit amid fierce fight between “no default” and “let’s default” camps

UKRAINE - In Brief 27 Mar 2020 by Dmytro Boyarchuk

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The Cabinet has submitted an amended budget to the parliament, Oleksiy Honcharenko, an MP from European Solidarity of Petro Poroshenko, wrote on his Facebook page yesterday. New deficit was outlined at the level of UAH 202 billion or near 4.7% of GDP. Funds within the budget will be re-distributed towards newly created stabilization fund to fight COVID-19 consequences. UAH 124 billion or 2.9% of GDP will be allocated to the stabilization fund. At the same time almost all Ministries will experience spending cuts. The stabilization fund will be under Minister of Finance with flexible approach to the funds’ use for prompt reaction in case of emergency. The flexibility already triggered critique about corruption risks. So far there was no official draft budget on the web-site of the parliament. And today media already suggested somewhat different version of updated spending plan. Now they talk about budget deficit at the level of UAH 300 billion which is 7% of GDP. Apparently, budget revision is in progress. And final numbers will arrive later. But in any case deficit will be huge. But how the deficit will be covered? The Cabinet expects to get extra funding from the IMF. Active negotiations are in progress. The IMF anticipates the parliament to approve so called ‘anti-Kolomoyskiy’ law which prevents Privatbank return to former owners. Also the Fund insists on land market. This week an updated version of ‘anti-Kolomoyskiy’ law’, allegedly blessed by the IMF, was submitted to the parliament. Now we expect MPs to gather and to approve the required bills. Meanwhile “let’s default” campaign is unfolding gaining popularity among many influential people. For some reason they bel...