Ukraine's Gov't Looks to Cover Deficits

KIEV, Ukraine -- Ukraine's government on Wednesday proposed spending 70 percent of the massive windfall earnings from the privatization of the country's flagship steel plant to cover growing budget deficits.


Finance Minister Viktor Pinzenyk
The Kryvorizhstal mill was acquired last month by the world's largest steel producer, Mittal Steel, for 24.2 billion hryvna (US$4.8 billion; euro4.02 billion), far exceeding analysts' predictions. The sale was the single largest foreign investment ever for Ukraine - equivalent to about 20 percent of this year's anticipated revenues.

Finance Minister Viktor Pinzenyk said the government wanted to spend nearly three-quarters of the windfall to cover budget deficits, which come to 7.9 billion hryvna (US$1.6 billion; euro1.3 billion) in 2005 and rise to 11.4 billion hryvna (US$2.3 billion; euro1.9 billion) next year.

Pinzenyk said the government would use the rest of the windfall to create a special stabilization fund.

He repeated assurances that the government planned to return 4.3 billion hryvna (US$860,000; euro720,000) to the consortium that bought the mill last year in an auction widely considered rigged. After becoming president in January, Viktor Yushchenko annulled the sale to the son-in-law of President Leonid Kuchma and another tycoon.

Source: AP