In case Ukraine's lawmakers were wondering which way the West wants them to vote on next year's budget, a Dec. 22 statement by the ambassadors of the G7 countries removed any doubt.
The ambassadors of the seven industrial nations — United States, France, Italy, Japan, Great Britain, Germany and Canada — came down firmly on the side of the government’s budget proposal, pushed forward by Finance Minister Natalie Jaresko.
A rival tax and budget plan is being touted by members of parliament Nina Yuzhanina and Tetiana Ostrikova. However, according to Finance Ministry and International Monetary Fund estimates, the parliament plan would create a budget deficit larger than the 3.7 percent of gross domestic product set by the IMF.
At stake is another $4 billion in Western credits, including a low-interest $1.7 billion IMF third-tranche loan. Ukraine’s government will spend, in any case, less than $40 billion a year – about 40 percent of the expected 2016 GDP of $94 billion.
Ukraine will have to pass a “fiscally sustainable budget” if it hopes to continue to get Western aid, as the ambassadors declared in the statement. The issuance of the statement is a sign that the government is having difficulty getting the necessary majority to pass its tax and budget plant.
Here is the text of the G7 ambassadors statement:
“This week, the Rada will vote on several key pieces of legislation, including the 2016 State Budget and amendments to the Tax Code of Ukraine. G7 Ambassadors have followed the process very closely over recent weeks. We commend and fully support the efforts of the Government to achieve a workable deal that is in line with Ukraine’s reform commitments under its IMF program. Passing a fiscally sustainable budget is vital for Ukraine’s economic health and stability as well as the continuation of financial assistance from Ukraine’s international partners. G7 Ambassadors call on Rada Deputies to support the Government’s proposed package. The reforms to which Ukraine has committed in its IMF programme will be essential to restore economic stability and return Ukraine to a path to growth and prosperity. We call upon Rada Deputies to exercise their responsibilities carefully and not to jeopardise this programme.”
