Ukraine Leader Demands `Realistic` Budget From PM

Industrial production in the ex-Soviet state plunged between 20-30 percent in October and December.

President Viktor Yushchenko on Friday demanded that his arch rival, Ukraine's prime minister, alter the 2009 budget to withstand the world financial crisis.

The president accused Prime Minister Yulia Tymoshenko, his estranged ally from the 2004 "Orange Revolution", of deliberately drafting a budget with targets he said were impossible to fulfil.

"I hereby appeal to Yulia Tymoshenko and to the majority in parliament that she has put together. This is your responsibility," Yushchenko said in a televised address.

"You have knowingly included in the budget inflated indicators and promises that cannot be fulfilled today."

Members of parliament backing the prime minister, he said, were "supporting populism which tomorrow will turn into unpaid salaries, pensions, stipends and social benefits".

"On behalf of the entire country I demand that the government and parliament put together an honest budget in which expenditure matches the possibilities afforded by our economy."

The budget, passed just before the New Year, provides for negative growth of only 0.4 percent against forecasts by some bodies, including the economy minister, of minus 5 percent as Ukraine is battered by the effects of the crisis.

Industrial production in the ex-Soviet state plunged between 20-30 percent in October and December and growth shrank by over 14 percent in November and December month-on-month. The economy grew 2.1 percent in 2008 against 7.6 percent in 2007.

The budget also provides for a deficit of 3 percent despite a stipulation by the International Monetary Fund that it be deficit-free. An IMF mission is currently in Kiev to review progress by the government and determine whether to disburse the second tranche of a $16.4 billion credit approved last year.

The prime minister has defended her government's budget and vowed to implement it. The tone of both leaders has become increasingly strident, with the prime minister repeatedly calling on Yushchenko to resign.

In his remarks, Yushchenko said he backed reservations on the budget attributed this week to Finance Minister Viktor Pynzenyk on a major Internet site. Pynzenyk dissociated himself from the report without making an outright denial.

Yushchenko has been at odds with Tymoshenko on virtually all policy issues since she became premier a second time in 2007 and in his remarks repeated allegations that she had clinched a gas supply and pricing deal with Russia detrimental to Ukraine.

The prime minister, he said, was deliberately responsible for "the economic situation, the disruption of the budget process, the wrecking of the banking system ... Enough of lies."

He vowed to defend Ukrainians against the effects of the crisis and called on the chairman of parliament to take action to ensure that the budget would be suitably amended.