1999 Budget Signed

In fact, Mr. Kuchma had little choice. Not to sign the budget meant not to receive the next loan installments (it is planned to cover 50% of the budget deficit by means of foreign loans), thus not only losing the election but also risking massive civil disorder. Actually, it was not just a budget that the IMF demanded be approved. They demanded a realistic budget, and this is why a few months before adoption of the main financial law, the President declared he would not sign an unrealistic budget. Even without the assistance of his aides Kuchma understands that the budget adopted is unrealistic. The overseas examiners already know our realities, but they close their eyes to it for reasons known only to themselves. It seems that it was not too difficult for Cabinet officials to persuade them. Now they will be able to report that loans can be granted under this budget.

The President and government will have to implement this budget and they are most likely to fail. Suffice it to say that they would have to hire every racketeer in Ukraine to make oil and gas companies pay their debts. If less revenues come in than planned, it will be impossible to keep the planned financing for at least secured issues (budget organization wages and salary, settling pay and pension arrears, expenditures for education, purchasing medical supplies, debt service, transfers to state administrative organs, pensions, subsidies, and stipends). This is why the need for sequestration and planned expenditure cuts will reemerge around summertime. So far the President had vetoed an attempt by People's Deputies to deprive him of his right to sequester state budget funds. But with escalation of the pre-election opposition between the President and Parliament, the latter has a chance to garner the 300 votes needed to override the veto. And then there will be no legal levers to cut expenditures.