Real Sequester Instead of Real Budget

The Ukrainian cabinet studied the possibility of sequestering budget expenditures in 2001 as per nine months of the current year, Vice Premier Yuri Yekhanurov announced after the cabinet met Wednesday.

The former number two of the former cabinet added that the matter was raised after planned external budget revenues were never received and considering gas transit returns. The cabinet, however, made no decisions. Mr. Yekhanurov explained that Uk raine could have a shortfall of UAH 1.5 billion in this year’s budget provided all the other resources were mobilized, reports Interfax Ukraine. He believes that most of the lost budget revenues could be in terms of World Bank loans. As planned previously, Ukraine was to receive a $250 million loan in the first half of this year.

Meanwhile, one can only wonder at the sudden appearance of the budget sequester point on the agenda. First, the government promised a real istic budget, so the need to make reductions means that (a) the government was wrong in adding up the figures or (b) consciously led the public astray. Yushchenko’s exponents, incidentally, used the “real budget” as an argument in favor of his cabinet’s effectiveness. Meanwhile, just a day prior to the cabinet meeting to study sequestering, UNIAN carried the Finance Ministry’s statement saying the budget surplus was an estimated in January-April at UAH 227.4 million, compared to UAH 153.1 mil. in the same period of last year. Over the same four months, budget revenue items were implemented to the tune of 27.4% of the year’s plan against 26.3% in 2000. In light of these heartening statistics, the sequestering idea looks a little strange. Which spending items will be cut and who will be responsible? It appears like the departing cabinet is surrendering this prerogative to its successor.

COMMENTARY

Vitaly MELNYCHUK, deputy chairman of the Accounting Chamber of Ukraine:

Of course, one can wonder about budget surplus and how realistic it is now that we have problems financing certain budget items. Formally, however, we did have it. As for sequestering the budget (the need is explained by the results of nine months’ shortage of budget revenues), it is perfectly clear that the government is worried even now, seeing no huge privatization proceeds coming due to the recent scandals. This is precisely the main factor causing future budget gaps. I think oil and gas transit yields are also giving them problems. It is true that the revenues do not tally with the budget estimates. Naftohaz Ukrayiny is having big problems, and the Accounting Chamber has done some checking. Now the complaints about inadequate external revenues sound quite improper. The budget was adopted as a balanced one, and it provides for no financing using foreign and domestic loans. Simultaneously, budget performance in the first quarter looks not bad at all. Yet we are all worried by the sequester idea. Wouldn’t it be better for the new government to concentrate on carrying out the budget, rather than prompt it to consider sequestering? Personally, I would be in no hurry to make such statements.