Editor's Note: The following is a statement by the International Monetary Fund warning that Ukraine's failure to approve a new tax code and 2016 budget that limits the deficit to 3.7 percent of gross domestic product imperils the next $1.7 billion loan tranche. If the IMF quits lending to Ukraine, another $2.3 billion in Western lending from the United States, European Union and World Bank is imperiled as well.
Mr. David Lipton, first deputy managing director of the International Monetary Fund, issued the following statement on Dec. 18:
“Following significant work at a technical level, a draft budget and supporting tax legislation were submitted to Parliament on December 11, 2015. It is with concern that we have observed the discussions yesterday in Parliament that effectively rejected the government’s proposals for a new tax code and the government budget for 2016.
“Approval of a budget consistent with the program objective of reducing the general government deficit to 3.7 percent of GDP is a key condition for the completion of the second review under the EFF-supported program. At the same time, it is equally important that the budget is supported by structural reforms to remove exemptions and widen the tax base, as well as streamline government spending on a sustainable basis, which also are key objectives of the program.
“Approval of a budget that deviates from program objectives for 2016 and the medium-term will interrupt the program and inevitably disrupt the associated international financing.”
