Verkhovna Rada received the draft state budget and the key parameters
of social and economic growth for 1999, which it is supposed to approve
by the end of this year.
Parliament Deputy Speaker Viktor Medvedchuk called the budget deficit
indicated in the draft (0.6% of the GDP, or Hr 712 million, which is the
balance between the expenses and the revenues) not realistic and said the
SDPU(u) faction was going to propose that the "full amount of arrears of
social payments" also be included in the budget deficit.
The experts have divergent opinions on this: some think that increasing
deficit will cause inflation, while the others consider that cuts in social
programs will cause further reduction in effective demand among the population.
The Day's expert and Candidate of Science (economics) Vitaly
Melnychuk, who is the Deputy Chairman of the Parliamentary Accounting Chamber,
said that the proposals to increase the deficit, voiced mostly by the Left,
have resulted only in growing sales volumes of government bonds. According
to Mr. Melnychuk, the requirement to increase expenditures should be discussed
in parallel fashion with sources for covering them.
Further, he said that one cannot but support the idea of including a
special budget expense item to regulate the repayment of the back wages
and salaries, pensions, etc. To accomplish this, one could either allocate
funds from budget revenues, which experts believe is obviously understated,
or even make a purposeful monetary emission providing, of course, it has
a solid basis. Creation of a new financial pyramid is not acceptable, said
Mr. Melnychuk: an emission of Hr 1 billion would cost the budget Hr 1.5-2
billion. The most effective way to collect the funds required to solve
social problems would be to increase budget revenues by canceling the innumerable
tax privileges granted by the government. The Tax Administration estimates
such privileges at Hr 19.7 billion in 1997 (in particular, VAT exemptions
amount to Hr 16 billion). This was 1.2 times more than all budget revenues,
and this year the situation has not changed.
The quality of the decision approved will tell both on ordinary people
and the whole economy






