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Ukraine's Parliament Approves 2015 Budget
KYIV, Dec 29 (Reuters) -- Ukraine's parliament backed a budget for 2015 on Monday that it had been under pressure to approve to secure the next tranche of financial aid under a $17 billion International Monetary Fund loan package, the Interfax news agency reported.
Before the budget vote in the early hours of the morning, deputies approved a series of austerity laws, including an amendment to impose additional duties on imports, that Prime Minister Arseny Yatsenyuk warned could prove unpopular with Ukraine's foreign trade partners.
Foreign currency reserves have more than halved since the beginning of the year to a 10-year low, due to gas debt repayments to Russia and efforts to support its struggling currency, the hryvnia.
Yatsenyuk said the budget could still be amended following talks with Ukraine's Western backers.
"A series of articles will change depending on what we agree with international lenders," Interfax quoted him as telling parliament. He said these discussions would start on Jan. 7.
Voting was delayed as deputies debated the merits of the law amendments required for the budget, with some arguing they unfairly increase prices for Ukrainians, many of whom are already struggling to make ends meet as the economy teeters on the edge of bankruptcy.
Ukraine's remaining foreign currency reserves stand at just under $10 billion, barely sufficient to cover two months of imports.
One new law will add 10 percent duty to taxes on food imports and an extra 5 percent on other imports excluding strategic imports such as gas.
"Problems could arise with our trade partners," Yatsenyuk told parliament, advising that the law should only come into effect once the government had consulted on it with international partners.
He said one of the main focuses of the new budget was defence and security spending, which will amount to 90 billion hryvnia.
A year of revolution and war with pro-Russian separatists has pushed the hryvnia to record lows and crippled the economy, which is forecast to shrink 4.3 percent next year.
This month, Kyiv said it needed the IMF to expand its bailout programme due to the worsened economic outlook, but the Fund and Ukraine's other Western backers have made it clear any further financial assistance will hinge on Kyiv's ability to implement the long-promised reforms.
More from RFE/RL's News Desk on Ukraine's new budget:
The adopted budget includes a $4 billion deficit. It increases military spending to more than $5.7 billion, an increase of nearly 8 percent. Social spending is set to be cut by $1 billion, including the closure of 400 rural schools and the dismissal of 100,000 teachers over two years.
The budget projects a 4.3 percent decline in GDP and inflation of 13 percent.
Yatsenyuk said that 2015 will be "very difficult in terms of economic stability."
From RFE/RL's News Desk:
A pro-Russian separatist leader in eastern Ukraine claims the former Soviet republic has taken a big risk by using fuel from a U.S. company in its nuclear power plants.
But Ukraine's state nuclear corporation denied Denis Pushilin's claim that radiation levels at the Zaporizhzhya nuclear power plant exceeded acceptable norms.
Pushilin, the so-called deputy chairman of the self-proclaimed Donetsk People's Republic, undermined the credibility of his claims by referring to the U.S. company as "Western house" instead of Westinghouse.
The Russian news agency Interfax reported that in a statement on December 28, Pushilin said Ukraine faces "a second Chornobyl" due to Kyiv's decision to use nuclear fuel supplied by Westinghouse -- a reference to the deadly 1986 nuclear power plant accident that spead radioactivity over parts of Europe.
Pushilin said that "currently the level of radiation is 14 times higher than the acceptable norm" in the area around the Zaporizhzhya plant and that the problem started November 28 "after an unsuccessful attempt to replace rods in the Russian-made third block (reactor) with the product of the American company Western house."
Interfax said it could not confirm "from any other source" the separatist official's claim of dangerous levels of radioactivity near the plant, which lies west of the areas held by pro-Russian separatists in the Donetsk and Luhansk regions.
The state nuclear corporation, Energoatom, said a problem with a generator had prompted technicians at the Zaporizhzhya plant to disconnect its sixth reactor from the power supply on December 28.
Energoatom said radiation levels at the plant and around it were within the normal range of "natural background radiation in the area."
Earlier this month, Energy Minister Volodymyr Demchyshyn said an accident on November 28 in the energy transfer system of the plant's No. 3 power-generating unit had prompted authorities to disconnect reactor No. 3 at the plant, which has six 1,000-megawatt reactors.
At that time, Demchyshyn said there was "no radiation leakage."
The reactors at Zaporizhzhya, Europe's largest nuclear plant, were built according to a different design than those at the Chornobyl plant.
Westinghouse has a contract to supply some 10 percent to 15 percent of Ukraine's nuclear fuel. Under the deal, which was extended until 2020 this year, the U.S.-based company could supply as much as 25 percent of Ukraine's nuclear fuel by the end of the contract period.
Russia's TVEL, a subsidiary of Russian state nuclear corporation Rosatom, continues to supply the bulk of nuclear fuel for Ukraine's reactors, all of which are Soviet- or Russian-built.
Ukraine, which relies on nuclear power for about half its electricity and gets much of its natural gas from Russia, is seeking to decrease dependence on Moscow for energy amid a conflict over Russia's annexation of Crimea and the deadly fighting between government forces and pro-Russian rebels in eastern Ukraine.
Pushilin also claimed the Temelin nuclear power plant in the Czech Republic experienced problems similar to those he claimed occurred at Zaporizhzhya when local technicians attempted to use foreign fuel in the Russian-built reactor.
He did not identify any source for the claim and did not provide details to support it.
Temelin initially used fuel from Westinghouse, but TVEL won a contract in 2006 to supply fuel for its two reactors for 10 years starting in 2010.
Rosatom and other Russian companies compete with companies from other countries for contracts to build nuclear power plants and supply them with fuel.
From RFE/RL's News Desk:
Ukrainian officials and a spokesman for the pro-Russian separatist fighters in Donetsk have traded accusations of violating the fragile cease-fire in the conflict in eastern Ukraine.
A Ukrainian Army spokesman said on December 29 that government forces had been fired on eight times overnight by fighters of the self-proclaimed Donbas militia. There were no reports of casualties.
Meanwhile, separatist officials said on December 29 that Ukrainian forces "shelled positions of the Donetsk People's Republic forces 13 times" in the previous 24 hours. The statement said there were no casualties among civilians or separatist fighters.
Also on December 29, a separatist news service reported the two sides will meet to discuss a possible prisoner swap. It was not reported when or where the meeting will take place.
However, the separatist statemen said a transfer could be carried out before the end of the year.
On December 26, Kyiv exchanged about 220 people for some 145 captured Ukrainian soldiers.
From RFE/RL's News Desk:
Russia's government has announced the country's economy contracted last month, the first such contraction since October 2009.
The Economy Ministry said on December 29 the economy shrank 0.5 percent in November. The government earlier predicted GDP will fall by 4 percent in 2015.
The slump comes as global energy prices continue to fall, with oil prices having decreased by 50 percent since June. The Russian economy is heavily dependent on exports of oil and natural gas.
In addition, Russia's national currency has come under pressure as a result of Western sanctions against Moscow over the conflict in Ukraine. Those sanctions have reduced the ability of Russian companies to secure financing to make payments on their Western debts.
The weak ruble is also spurring inflation, which the Russian government says could run at more than 10 percent next year.