In an extraordinary address to parliament, President Leonid Kuchma proposed an anticrisis program which includes fiscal austerity and a floating exchange rate. The center-right president called for repealing most tax breaks while cutting tax rates, in an effort to improve tax compliance and increase government revenues. The Kuchma program would also privatize Ukrtelecom, the state-owned telecommunications company, and earmark the revenues to pay wage arrears to government employees. The trading band around the hryvnya would be abandoned in favor of a freely floating exchange rate. The hryvnya has lost about a third of its value since the collapse of the Russian ruble in mid-August.
Kuchma’s plan, which includes a 1999 budget with a deficit of only 0.6 percent of gross domestic product, may please the International Monetary Fund, but it has no chance of adoption. The tax and budget proposals require parliamentary approval, and the left-wing parliament will have none of it. The parliament has already sent Kuchma a bill to raise the minimum wage by a completely unpayable 270 percent. The president will veto the bill, no doubt, but the budget is dead on arrival.