KIEV, Dec. 12 ??“ The government will have to come up with extra 5 billion hryvnias, or $1 billion, next year to increase social spending to meet demands from President Viktor Yushchenko for accepting the 2007 budget.

Yushchenko vetoed the budget on Monday as he had urged the government to increase minimum wages and pensions. The government is now facing the deadline of Dec. 31 to change the budget or face major financial problems as soon as next month.

???The president suggests to increase the spending by 5 billion hryvnias,??? Yevhen Kushnariov, a senior member of the pro-government coalition, said Tuesday.

The calls for greater spending next year puts growing pressure on the government to reduce other spending or face a greater budget deficit, which has been set at about 15 billion hryvnias, or 2.55% of the GDP.

The development suggests the budget deficit may again become an issue during debates in Parliament within the next two weeks amid concerns that budget gap has been already too high.

The government planned to sell more than 10 billion hryvnias worth of state assets to cover the budget deficit next year, but analysts said it could raise only about 2 billion hryvnias.

Yushchenko has earlier criticized the budget deficit of 2.55% of the GDP as too high that may lead to accelerating inflation.

Economy Minister Volodymyr Makukha said changing the budget draft will require a major effort on the part of the government and could take more time.

???Even a little increase in the minimum wage and the minimum pension, like an avalanche, would require increasing other spending,??? Makukha said at a press conference. ???When we talk about increasing social spending??¦ we have to understand at expense of what? Are there such funds in the budget????

Viktor Baloha, Yushchenko??™s chief of staff, said 20 days is enough time to re-draft the budget to meet the demands from the president.

???Lawmakers have enough time to change the draft,??? Baloha said. ???The year of 2007 can be started with an honest, just and socially responsible budget.???

Meanwhile, the budget veto comes amid increasing conflict between the pro-Western president and the pro-Russian government over the country??™s foreign policy and over the pace of economic reforms.

Prime Minister Viktor Yanukovych during the past four months has been challenging Yushchenko??™s power to define the foreign policy following controversial amendments to the constitution enacted earlier this year. (tl/ez)