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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Next Generation Will Work to Pay off Debts of Current Government

17 November, 1998 - 00:00

Today no one is really fighting for the government. There is nothing more
to divide up: the treasury is empty, and the accumulated debts only scare
people away. This is why the only posts people are interested in are those
making it possible to join the scheme, allowing one to get privileges for
his own structures or share a little of the state budget. It is also impossible
not to react to the activity (or inactivity) of the current government.

Last Tuesday Parliament recognized the Cabinet of Ministers' work related
to the state debt as a threat to Ukraine's economic independence. The Prosecutor's
General was assigned to check on the circumstances of legal violations,
connected with the rise and servicing of state debts, and to call to account
the officials responsible.

According to the Counting Council Chairman Valentyn Symonenko, this
year 95% of the state budget revenues are being used to cover the state
debt. Ukraine's debt is Hr 993 per capita.

During the nine months of the current year, the government borrowed
Hr 10.6 billion. The Counting Council estimates direct expenses to the
state budget for servicing domestic bonds at Hr 8 billion. According to
Symonenko, this is "beautifully package state poverty, which is called
foreign and domestic bonds policy."

Actually, according to all international criteria, this level of loans
shows a debt crisis and is dangerous to a country's economy as a whole.
According to World Bank criteria, the debt level should not exceed 50%
of the GDP, and the Russian National Security Council recommends it not
exceed 25%.

Frankly, our government assures us that everything is okay and we are
still far from a debt crisis. They argue that Italy's national debt is
120% of the GDP. This is true, but the Italians have borrowed money for
decades and at low interest. We have to pay off our domestic bonds right
now. Using various methods, the government has managed to convert part
of its debt for 2-5.5 years, reducing the pressure on the state budget
by Hr 1.2 billion this year and Hr 657 million next. The government has
every reason to hope, that it will be the next Cabinet of Ministers which
will have to pay off the debt. This, however, will not reduce the debt:
82% of the internal national debt is in domestic bonds.

Incidentally, there is every reason to think that the government has
not included all its debts. Somehow the wage and salary arrears (Hr 3.5
billion), loans granted to the government by commercial banks (Hr 300 million)
and some other items have not been included in the state debt. According
article 6 of the law on the domestic national debt, when Parliament approves
the budget it can also set a ceiling on domestic debt for the coming year.
No such debt ceiling was adopted in 1997 and 1998.

 

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