The Ukrainian authorities and the International Monetary Fund's mission intend to improve a fiscal deficit target for 2010 from 6.5% to 4% of GDP, or UAH 42.1 billion, at the expense of cutting subsidies on the increased gas price for households and heat and power supply companies, holding tax and pension reforms.
The increase of the gas price is to cut Ukrainian national gas company Naftogaz Ukrainy's operational deficit next year from 2% of GDP to 1% of GDP, whereas tax and pension reforms will allow cutting the deficit by another 1.5% of GDP, the IMF said on Wednesday in materials prepared in July as part of a second report on the fund's cooperation program with Ukraine.
Ukraine is expected to issue government bonds worth UAH 20 billion, or 1.9% of GDP for recapitalization of banks in 2010.
The IMF said that this year Ukraine would keep the budget deficit at 6% of GDP, or UAH 55 billion, which together with Naftogaz Ukrainy's deficit will make 8.6% of GDP, or UAH 79.1 billion. Whereas the refusal to raise the gas price for households by 20% starting from September 1, and for municipal heat and energy supply companies – from October 1, will raise the deficit by UAH 0.9 billion or 0.1% of the GDP.
Besides, this year Ukraine will need another UAH 24 billion for recapitalization of banks, which will be covered by government bonds.
Ukraine's budget deficit in 2008 was 2.6% of the GDP, or UAH 24.3 billion.
