On Sept. 13 the Ukrainian government discussed and adopted the draft of the 2007 state budget, which will now pass to parliament for the first reading before the official deadline of Sept. 15, when the budget will be presented to the media and the public.
The draft takes into account the projection of the average yearly currency exchange rate at UAH 5.1 per $1, an actual GDP increase of 6.5 percent, and an inflation rate of 7.5 percent. Nominal GDP is supposed to reach UAH 594.1 billion, and an increase in prices for industrial products of 14.4 percent.
Discussing budget issues in parliament may serve as a test of how real the government coalition is. At any rate, we may expect that the authors of the budget draft, primarily Mykola Azarov, who combines the posts of deputy prime minister and finance minister, will become the target of criticism not only for the “legal” opposition (the BYuT, Yulia Tymoshenko’s bloc) but also for Our Ukraine (NU), which is striving to join the coalition, and maybe for left-wing parties that have already integrated into the coalition.
Meanwhile, it is the NU that is fielding the brunt of the criticism, since Yurii Yekhanurov’s government had control over implementing the budget during the first half of the year. The Accounting Chamber, the government’s top financial controller, has uncovered shortcomings in the activities of the Ministry of Finance in January-June 2006. The main criticism is directed at the “manual” control of budgetary spending.
In addition, Ukraine has amassed VAT refund debts. The fact that businesses have overpaid taxes testifies to the fiscal system’s illicit pressure. Auditors claim that UAH 900 million more than the planned revenue part of the budget in January-June included UAH 5.6 billion hryvnias’ worth of tax surplus payments, UAH 1.8 billion more than at the beginning of the year. The auditors’ data also show that planned budget payments were not fulfilled, which resulted in a 29.2 percent increase in creditor debts to budgeted establishments.
The mortification of state institutions is not the worst evil. What is worse is seeing the hands of begging mothers with their babies at subway crossings of the capital city. Why?
The answer to The Day’s question was supplied by Volodymyr Skomorovsky, the president of At the Crossroads analytical center (www.skomarovsky.com.ua). He confirmed that on Feb. 3, 2005 the Verkhovna Rada adopted a law on amendments to the “Law on State Support of Families with Children.”
However, the adopted law was not fully implemented. Finance minister Viktor Pynzenyk’s initiative was the reason behind this. He was the one who insisted on excluding aid to mothers with children under three from the 2006 state budget. The budget allocation for this kind of financial assistance should have reached approximately UAH 2 billion in 2006.
Skomorovsky is convinced that the impementation of President Yushchenko’s promise to increase child benefits to UAH 8,5000 had a positive influence on Ukraine’s birth rate. However, in addition to increasing these benefits, the budget draft includes assistance for children under three in the amount of the living wage for children under five years old as specified by the law. But the “Law on the 2006 State Budget” suspended this standard.
“Today a Ukrainian mother who gives birth receives as much as UAH 120 every month. The payment of UAH 8,500 is staggered over a 12 month period,” says Skomorovsky. He is surprised by the former minister’s attitude to mothers and children. He is even more surprised because last year’s budget was increased by 53 percent compared to the 2004 budget.
The Ukrainian analyst accuses the ex-minister and his ministry of inefficient disbursement of the UAH 24 billion that was received from the resale of Kryvorizhstal, and failure to provide mothers with small children with UAH 2 billion. “There is still an acute need for the state to mobilize considerable efforts and resources to stave off the demographic crisis,” Skomarovsky says.
His next comment is probably directed at the drafters of the new budget bill: “We need to understand a very simple truth: wealth is the basis of reproduction of the population.”
Pynzenyk believes there are no grounds to accuse the former cabinet of leaving “gaps” in the state budget. He claims that “criticizing him does not prove the existence of current budget problems, but prepares public opinion for failure in the matter of its implementation.”
How can a mother, who finds herself begging at a subway crossing, make heads or tails of this?