2005 Budget Amendments Submitted To Parliament

The amendments call for a 25% increase in budget revenues to USD 20.4 bn and an expenditure increase of up to 18% to USD 21.4 bn. The budget deficit would be equal to privatization proceeds, or USD 1.0 bn. The government also forecasts GDP will increase by 8.2% and inflation will grow 9.8% in 2005. The amendments will be reviewed by the Rada on March 24. Concorde Capital: The proposed budget changes are based on expected improvements in Ukraine?s key macroeconomic indicators. We are more cautious than the government about Ukraine?s macroeconomic factors. While the government believes a planned railway tariff hike of up to 100% will only raise inflation by 1.6%, we believe the outcome of the tariff increase is more difficult to estimate. Unless we see any positive changes, our 2005 inflation estimates remains 11% and our GDP forecast at 7%.