Ukrainian Lawmakers Back Bill to Repay VAT With Promissory Notes

Ukraine’s parliament adopted a bill allowing the government to repay value-added tax to exporters by issuing promissory notes.

The law was backed by 246 lawmakers in the 450-seat legislature today in the capital, Kiev. The five-year notes, which will yield 5 percent, can also be used to repay budget debt through January, Valeriy Omelchenko, a lawmaker from President Viktor Yanukovych’s party, told parliament.

Ukraine, which exited a six-month recession in the first quarter, remains in talks with the International Monetary Fund over a third bailout in four years. Its budget deficit jumped to 18.5 billion hryvnia ($2.3 billion) in the first five months from 3.7 billion hryvnia in the year-earlier period.

The government owes exporters 5 billion hryvnia in VAT reimbursements, while another 10 billion hryvnia is being disputed in court, Revenue and Fees Minister Oleksandr Klymenko said June 7. Budget debt was 4.35 billion hryvnia as of Jan. 1, according to a document presented by Omelchenko.

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