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On Second Attempt, Rada Adopts the Law on Avoiding the Financial Disaster

On Second Attempt, Rada Adopts the Law on Avoiding the Financial Disaster

People’s deputies have, on second attempt, adopted the Law “On Avoiding the Financial Disaster and Creating Prerequisites for Economic Growth in Ukraine.” 246 out of 321 deputies registered for the session have voted in favor of this decision (on the first attempt, only 189 deputies voted for this decision). None of the MPs from the Communist Party faction have voted for the law, and only one MP from the Party of Regions faction has voted for it.

The adopted document is part of a package of laws that should enable financial assistance from the International Monetary Fund and other international creditors.

Ukraine’s Minister of Finance Oleksandr Shlapak reported that, as part of preliminary consultations, a consensus was reached with the group of MPs for Economic Development, specifying that the fee for exploitation of subsurface resources will remain at the current rate of 39%, while the fee for condensed gas will increase to 42%.

Shlapak also stated that a compromise was reached on the issue of VAT for grain export transactions: the VAT exemption on export of grains and technical cultures will be introduced in the same wording as it exists under current laws, but will be effective from October 1, 2014 – rather than from January 1, 2014. Parliament Speaker Oleksandr Turchynov reported that such a suggestion came in from the UDAR party faction and the Economic Development group.

The Parliament also voted to repeal benefits and preferences for civil servants.

As a reminder, during the morning session of Parliament, Prime Minister of Ukraine Arseniy Yatsenyuk stated that Ukraine is on the brink of economic and financial bankruptcy, while the size of fiscal gap (i.e., the shortage of funds needed for the country’s survival) is UAH 289 billion (approximately US$ 26 billion). In order to stabilize the situation, the Government suggested cutting the budget expenditures by UAH 2.54 billion. Other measures included laying off 24 thousand civil servants, freezing the levels of poverty line and the minimum wage for 2014, raising the excise taxes for alcohol and tobacco, and taxing personal incomes exceeding UAH 300 thousand per year at the rate of 20%.

Previously, it was reported that Verkhovna Rada had also adopted amendments to the State Budget of Ukraine for 2014.

Translated by Olga Ruda


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