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UPDATE 2-Ukraine PM rejects IMF forecast, predicts '09 growth

Thu, 5th Feb 2009 14:19

By Natalya Zinets

KIEV, Feb 5 (Reuters) - Ukrainian Prime Minister Yu
lia Tymoshenko defended her record before a parliamentary confidence vote on Thursday, rejecting IMF predictions of a shrinking economy and sticking to her government's growth forecast of 0.4 percent.

Tymoshenko's government is underpinned by a coalition of three groups whose strength is so far untested in the chamber. She told deputies that she would proceed with a cabinet reshuffle if her team survived the vote.

She told the chamber political will was needed to face down those predicting negative growth, including the International Monetary Fund. Growth last year stood at 2.1 percent of GDP.

'Ukraine plans for 0.4 percent growth in gross domestic product in 2009, whereas the IMF proposed a forecast of minus five percent,' Tymoshenko, sporting her trademark peasant braid, told deputies.

'The government did not agree with such a forecast. It is simply too easy to become reconciled to a fall. I believe Ukraine is strong, with resources and reserves and if the proper actions are taken at this difficult time, we can achieve this indicator as planned.'

The global economic crisis has slashed demand for Ukraine's chemical and steel exports. Industrial output dropped 20-30 percent year-on-year at the end of 2008.

An IMF mission has been in Kiev for the past two weeks to examine government policies and determine whether to release the second tranche of a $16.4 billion loan.

Fund officials have made no statements on the government's actions, including parliament's passage of a 2009 budget before the New Year with a 3 percent deficit despite an IMF stipulation that the plan be deficit-free.


Opposition leader and ex-prime minister Viktor Yanukovich, whose party had demanded that the government present a report to the chamber, said there would be no improvement in the economy until those in power were replaced.

'There is only one way out of this situation. The president, government and parliament must be changed,' he told the chamber. 'There must be early elections to parliament and for president.'

Tymoshenko has been long at odds with President Viktor Yushchenko, her liberal former ally from the 2004 pro-Western 'Orange Revolution'. Presidential chief of staff Viktor Baloga dismissed the premier's address as a fantasy.

'The prime minister's theses and arguments depict Ukraine as some sort of fable where a magic fairy creates all things good while troubles are created only by those wishing everyone ill,' he said in a statement on the presidential Internet site.

Yushchenko has urged the prime minister to alter the budget, saying many figures are unrealistic.

Tymoshenko suggested that if her government survived the vote, she would bring in experts from all political forces in a cabinet shuffle. Parliament must approve all cabinet changes.

Ukrainian news reports said several ministers were likely to lose their jobs. These included Finance Minister Viktor Pynzenyk who, according to a respected Internet news site, denounced the budget as excessively optimistic.

The prime minister also said the government was forecasting inflation of 9.5 percent, subject to movements by the hryvnia currency, against 22.3 percent recorded in 2008.

Tymoshenko has called for the resignation of the central bank chief, blaming him for the currency's sharp fall late last year.

She repeated to deputies her contention that the hyrvnia should stand at 6-6.5 to the dollar. The hryvnia, supported by central bank interventions, trades at just below 8.

(Writing by Ron Popeski; Editing by Ruth Pitchford) Keywords: UKRAINE ECONOMY/PM

(Kiev bureau; +380 44 244 9150 Reuters

Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

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