Government demands lower budget expenditures
The Cabinet of Ministers has instructed the State Treasury to provide funding before all for the key budget items, should budgetary receipts fall short of official targets. This is the upshot of the October 31 government decree No. 1640, On Measures to Restrict Inflating the Public Sector Debt. The Finance Ministry press service confirmed this news, released by the Ukrainian News agency, to The Day the Tuesday before last. Put simply, under the cabinet decree managers of budget funds are to assume financial responsibility for expenditures until yearend, which may not exceed the amount earmarked by the State Treasury. According to reliable information, the decree does not specify for how long or what ministries and departments have been instructed to cut spending. “The key managers of budget funds” have been so far only offered “to bring their financial obligations into compliance with the amount and structure of budget appropriations.”
In all probability, for this very reason The Day’s question (whether the said decree is evidence of a budget cutback for the current year) was met with an emphatic “no” by Finance Ministry press service chief Yury Tandit. “So far there’s been no budget cutback; the Cabinet of Ministers is to decide on whether to sequester budget allocations. Any other actions are not to be viewed as a budget cutback,” he stressed.
It is hard to disagree with such a laconic comment. The official procedure of cost-cutting or sequestering budget expenditures is indeed far more complex. Under the Budget Code, if a monthly report on fulfillment of the state budget shows the receipts are not enough for the planned appropriations, with the maximum budget deficit level taken into account (so far Ukraine can only dream of a budget surplus), then the Finance Ministry will impose a temporary limitation on these appropriations. Should quarterly results show a budget receipts shortfall in excess of 15%, the Finance Ministry is to draft proposals of modifications to the budget and will submit them for consideration by the Cabinet of Ministers, which will then be taken to the vote in the parliament in the form of a bill. Verkhovna Rada, in turn, is to decide on the state budget cutback, that is, on who will not get paid.
Whether the Finance Ministry likes it or not, the decree is arguably the first officially confirmed step on the way to sequestering the budget of 2002. Incidentally, parliamentary Budget Committee Chairman Petro Poroshenko, who professes to be politically unbiased, ever since July has been urging Kinakh’s cabinet to cut expenditures. And the week before last President Leonid Kuchma criticized the Cabinet of Ministers and National Bank for bungling the budget of 2002 and demanded that the government ensure the funding of social security payments.
Over the period from January through September, state budget receipts totaled UAH 24,646,300,000 which is 93.3% of the planned revenue for this period. Over the same period, budget expenditures amounted to UAH 23,689,600,000 or 82.7% of the planned amount for this period. Verkhovna Rada is to make a decision on the bill that would effect a budget cutback within two weeks after its submission by the Cabinet of Ministers. Under the Budget Code, before parliament passes the bill, disbursements will be made subject to temporary limitations on budgetary appropriations imposed by the Finance Ministry.
