February 16, 2006

Ukraine’s FinMin tenders resignation: report

KIEV (Reuters) - Ukraine's Finance Minister Viktor Pynzenyk
has tendered his resignation in protest over a costly gas deal
with Russia, leading Internet news site Ukrainska Pravda said
on Thursday, quoting government sources.

Pynzenyk has criticized the agreement, which nearly doubled
gas import prices for Ukraine, saying it endangered the 2006
budget. He is also running for parliament in the March general
election as leader of a centrist political party.

Officials in the government and in the party contacted by
Reuters declined to confirm or deny the report. Officials said
Pynzenyk was at a meeting.

The departure of Pynzenyk, a reformer and defender of
strict monetary and budget policies, may undermine Ukrainian
financial markets, analysts said.

"This is a blow to this credit as Pynzenyk is seen as an
orthodox market reformer, who has held the budget together in
2005-06 despite the deteriorating macro situation," Tim Ash,
emerging markets analyst at Bear Stearns, said in a note.

Pyzenyk said earlier this week that the gas deal with
Russia also threatened the solvency of state oil and gas
company Naftogaz due to concerns the gas price could further

Ukraine and Russia signed the new gas deal in the New Year.
The accord raised import prices for Kiev to $95 per 1,000 cubic
meters from $50 previously. Gas will be sold at $110 inside
Ukraine to cover tax and transportation costs.

Kiev and Moscow are still wrangling on the details of the