Minus five years...

The announcement issued by Valentyn Symonenko, head of the Accounting Chamber, was a sensational one, unfortunately, especially in the light of the report that was delivered earlier in parliament by Mr. Osaulenko, the head of the Derzhkomstat (State Statistics Committee). Osaulenko, whose activities have become practically classified since the days of the Lazarenko cabinet, answered questions from MPs in a diffident manner. Moreover, in his comments on the indices of the unprecedented economic depression, he made every effort to demonstrate his readiness to “correct” these statistics. This was the impression left from his exchange of remarks with Oleksandr Moroz.

Valentyn Symonenko appeared to be considerably more confident in the Verkhovna Rada. His seven-year status, protected by the Constitution of Ukraine, and his experience of working for several governments and under three presidents allowed Ukraine’s premier budget auditor to call things by their proper names.

When he spoke in parliament on September 21, commenting on the cabinet’s seven-month progress report on the 2005 budget, he reminded those present that in terms of the economic growth rate in 2000-04 Ukraine has joined the group of world leaders. “Today we must admit that in 2005 the GDP rate has dropped by 3.6 times and that industrial output is four times lower than in January-June 2004,” Symonenko said. “The dynamics show that toward the end of the year the slowing rate of growth may start plummeting,” he noted. According to the head of the Accounting Chamber, in the first half of this year the fixed capital investment rate has gone down almost four times and the same is true of the central budget’s share.

Symonenko pointed out that in January-June 2005 commodity imports showed a rate well above the prognosticated one; there was also an increase in commodity exports, which had been facilitated by the government and members of parliament. As a result, the negative foreign trade balance was down by more than 21 times, as of August 1. “We’ve dropped back to the 2000 level,” he declared.

According to the head of the Accounting Chamber, during the first seven months of this year the central budget received UAH 54.8 million, which is 51.6 percent compared to the fixed yearly indices. Symonenko said that, in comparison with last year, revenues have increased by 19 million hryvnias, noting that these revenues are on a sharp upward curve, what with the current slow economic growth rate. He said that there is a “very trivial” reason for this phenomenon. Ukraine’s state tax administration statistics show that excess tax payments, duties, and other compulsory payments amount to 8.3 million hryvnias. At the start of 2005, the sum total was 2.9 million hryvnias. Symonenko adds that the central budget still has to pay 3.4 billion hryvnias’ worth of outstanding VAT compensations. He repeated that as of January 1, 2005, the budget’s outstanding VAT compensations amounted to 3.5 billion hryvnias and seven months later this sum has increased to more than 6.2 billion hryvnias. “Therefore, the budget revenues plan was overfulfilled primarily by using factors that had nothing to do with the results of economic activity,” he stressed.

The facts cited by Symonenko give rise to an alarming conclusion: when implementing the budget spending plan, the main indices of the Ukrainian economy’s “health” have worsened several times. So, it won’t be long before the government — whoever heads it — will have to substantially reduce social programs. This may well happen right after the parliamentary elections in 2006.