Ukraine’s lawmakers approved the 2015 state budget as the country seeks to unlock the next tranche of a $17 billion bailout loan from the International Monetary Fund.

The budget was backed today by 233 lawmakers in the 450-seat Kiev-based legislature at 4:30 a.m. after debating tax-code changes and other issues since 10 a.m. yesterday. Supporters of the bill sang the national anthem and Cabinet members hugged one another after the legislation was approved.

“This budget, like other budgets adopted in this hall, is far from perfect,” Prime Minister Arseniy Yatsenyuk said before the vote. “That’s why the budget must be reviewed no later than Feb. 15. We will amend it based on the result of talks with international financial organizations.”

The $17 billion bailout is already proving insufficient as Ukraine is grappling with its deepest recession since 2009 and its currency has plunged 48 percent against the dollar this year. The country’s credit rating was cut this month by Standard & Poor’s, which said a default could become inevitable as central bank reserves are melting and a bailout is being held up as fighting continues in the country’s east.

Ukraine needs $15 billion on top of the existing bailout, according to the European Union, to stay afloat as the bloodiest conflict since World War II ravages industry in the country’s Donetsk and Luhansk regions. The government estimates gross domestic product will contract 7 percent this year, while foreign reserves are below $10 billion -- the lowest in more than a decade.

IMF Mission

Yatsenyuk said today that talks with international lenders will start on Jan. 7.

An IMF mission will return early next year to discuss financial aid should parliament approve the budget, Finance Minister Natalie Jaresko said Dec. 26. The budget is aimed at stabilizing state finances, which will help stabilize the hryvnia rate, she said.

The budget envisages an increase of defense spending to 5.2 percent of GDP, Jaresko said. It cuts social spending to keep the budget deficit in check, while doubling duties to 10 percent on imports that are not “essential.”

The government sees the budget deficit, excluding funds needed for state-run energy company NAK Naftogaz Ukrainy, at 3.7 percent of GDP. Yatsenyuk said the government spent 110 billion hryvnia ($7 billion) this year on Naftogaz and plans to cut subsidies to 32 billion hryvnia in 2015.

Yatsenyuk said the subsidy will be lifted if the price of natural gas for households is increased to “market levels.”

Bloomberg