Ukraine Finance Minister Quits Over Budget Deficit

Ukrainian Finance Minister Viktor Pynzenyk resigned on Thursday, saying he had become a "hostage to politics" in a Pynzenyk cited differences over a deficit contained in the budget backed by Prime Minister Yulia Tymoshenko, defying the International Monetary Fund which made a deficit-free budget a condition of its $16.4 billion loan.Ukraine sought the loan to help it weather the world financial crisis which has slashed the value of its hryvnia currency and battered the commodity exporters that form the core of its economy."In current conditions, the professional job of finance minister has become a hostage to politics," Pynzenyk said in a statement to parliament that appeared on his ministry's website. He cited differences in financing the deficit."The finance minister cannot change the situation. Nor can he walk away from his professional actions. There is no point in remaining in the job of finance minister in such conditions."A respected online news service last month published a letter it said was written by Pynzenyk denouncing as unrealistic the budget overseen by Prime Minister Yulia Tymoshenko.The budget allowed for a deficit equivalent to 3.0 percent of gross domestic product.Pynzenyk criticised publication of the letter but did not formally deny that he had written it. In addition to his current term as as finance minister from 2007, he had held that and other senior posts in the 1990s.An International Monetary Fund mission left Kiev last week with no decision on disbursing the second instalment of the loan for Ukraine.Tymoshenko noted that the minister had been on sick leave and in hospital for some time."Not all officials are able to to deal with the world financial crisis. Not all are able to work and react to the challenges in a proper manner," she told a news conference."Those who are the weakest give ground on the key positions and end up leaving and dealing with other matters."She said a new minister would soon be appointed.Tymoshenko has approached several countries, including Russia, to secure credits to cover a budget deficit.Tymoshenko's approach to Moscow for a $5 billion credit has sparked new disputes between the premier and her estranged ally from the 2004 "Orange Revolution", President Viktor Yushchenko.In an earlier statement on his Website, Yushchenko issued a new call for the cabinet to "review its economic strategy and deficit parameters" and come up with a more "realistic" budget.IMF REQUIREMENTSUkraine's central bank, meanwhile, announced it would no longer sell foreign currency to banks who conduct transactions at exchange rates exceeding the average market value of the U.S. dollar.Dealers said that action was linked to another IMF requirement limiting to two percent the difference between the official rate of the hryvnia currency and market transactions.The bank expressed its "deep concern" at banks conducting operations at rates "far exceeding the average market rate" and suggested it could take other punitive measures against them.The central bank intervenes on the interbank market from Monday to Thursday in support of the hryvnia currency and conducts dollar auctions each Friday.Dealers said the central bank's action would create further dollar shortages, with exporters reluctant to sell at low prices. That, in turn, would prompt new intervention.Tymoshenko has urged the president to sack the central bank chairman over the steep plunge in the hryvnia's value last year and said its should be no weaker than 6.0-6.5 to the dollar.The hryvnia's difficulties are reflected in the worsening trade deficit for goods, pegged by officials at a record $18.532 billion for 2008 against $11.322 billion a year earlier.dispute with the prime minister over the budget.