Government To Use Eurobonds, World Bank Loan To Plug Gap In 2007 Budget

Deputy Finance Minister Anatoliy Kravets said yesterday that the government plans to cover the 2007 budget deficit by borrowing roughly USD 1.2 bln through issuance of USD 700 mln in Eurobonds and attracting a USD 500 loand from the World Bank. According to Kravets the government still has not decided in what currency to issue the Eurobonds. Additionally Kravets said that should the government fail to attract a loan from the World Bank, it would likely make an additional Eurobond placement. Oleksandr Klymchuk:  The terms of government’s borrowings on external markets are heavily dependant on privatization revenues as well as of the deficit itself. There are two facts that make us question the 2007 state budget deficit of 2.5% to GDP: (1) with economy growing, revenues to the Budget general fund in January were 12% higher than planned; (2) last year the expected deficit of 2.5%, even despite lower-than-planned privatization revenues, turned to be just 0.7% . If the economy maintains its current pace, the budget is very likely to be reviewed by the Verhovna Rada.