Regime of Undeclared Bankruptcy

On October 12, Verkhovna Rada heard the Cabinet's “information” on its activities in paying pay and pension arrears. Finance Minister Mitiukov and Pension Fund head Zaichuk showered Parliament with optimistic figures and indices: social debts dropping in all regions over the first half of the year and fully redeemed (!) in Dnipropetrovsk oblast and Kyiv.

Measures taken by the Cabinet have reduce wage and salary arrears by UAH 618 million and back stipends by UAH 58 million, lowering budget liabilities two times. This seems miraculous and makes one wonder even more about the Pustovoitenko Cabinet's reluctance to share the good news with all those pensioners, miners, doctors, and students for whose benefit he and his ministers have been working so hard. Be it as it may, prior to the Cabinet's reports the parliamentary freedom of expression and information committee chairman Ivan Chyzh informed us that hard as the legislative branch had tried, it had been unable to break through the information siege and have the hearing broadcast live, “because the government would not budge, carrying out the President's orders.”

According to Communist Kriuchkov, “the People's Deputies did not respond in kind, lest Government Day be postponed yet again; keeping information about social redemption secret would also harm the lawmakers because they must have the actual picture and the Cabinet's intentions.”

Incidentally, the Solons refused to swallow yet another piece of bait tossed their way before hearing the Cabinet: “UTN Panorama” let it slip that Government Day might well never be held, because the matter of the Pustovoitenko Cabinet's ouster could be raised instead. Peasant Party leader Serhiy Dovhan described that “warning” as a cheap provocation, an attempt to distract the legislature's attention from the more fundamental issues. “Toppling the Cabinet is no longer relevant, for they will resign after the new President's victory anyway,” says Mr. Dovhan confidently. In a word, all attempts to get Parliament interested in bringing down the Cabinet or fighting the information mills failed. That was precisely why the People's Deputies could finally receive answers to the questions where exactly all that money came from in September, considering that there had been no money for the previous eight months, and how was the fact that pensions were being handed out in villages twice a day explained.

According to Valentyn Symonenko, head of the Verkhovna Rada Accounting Chamber, “The problem of paying debts is not money but the situation in which an approach to it is adopted.” He believes that the Cabinet's ignoring the Constitution and budget laws saying that social debts must be paid first of all, as well as the President making a host of decisions raising pensions, stipends, and giving servicemen pay raises only increases these debts, because the national piggy bank is empty, and that these debts will rise another 200 million hryvnias this year alone. What, then, is behind Messrs. Mitiukov's and Zaichuk's rosy forecasts? Mr. Symonenko points out that “in early September the government received a $100 million World Bank loan, translated it into hryvnias and is now cheerfully reporting debt reductions.” But in doing so, he continues, the Cabinet avoids mentioning certain interesting particulars: for example, that budget deficit has also increased by UAH 400 million, precisely the amount used to redeem arrears on wages and pensions. In addition, the government has introduced new redemption techniques, paying with gas and sugar. Yet the Accounting Chamber's inspections show that their costs were calculated 20-60% higher than market ones.

Under the circumstances it would be naive to expect the situation to be corrected using all those off-budget funds, even though organizations and institutions received a total of UAH 1.5 billion from those funds, but spent a mere 6% to supply their own needs. Where is the rest? People's Deputies answered this way: “Today, off-budget funds are being spent on the presidential campaign, making and buying leaflets, posters, staging gala shows and free admittance concerts, all in support of the number one candidate.”

“We are in a state of undeclared bankruptcy,” parliamentary social policy committee chairman Yevhen Marchuk confirmed the grave situation and cited examples: allocations for daycare centers were twelve times lower than for top officials' business trips abroad; those for the protection of soils and rational land use programs were three times lower than for the maintenance of the Land Committee staff.

Mr. Marchuk also noted that ranking officials' declarations about lack of funds to repay social debts are untrue, as the state annually loses billions of hryvnias because of tobacco and wines and spirits contraband, while business structures and banks taking orders from the President are given unjustified tax breaks. He further pointed to the continuous practice of Cabinet guarantees being given politically “loyal” entities, meaning up to UAH 4 billion budget hryvnias annually. Mr. Marchuk is convinced that “the state has enough money,” but today the revenues produced by the most profitable industries are actually appropriated by criminal clans.

Despite everything stated already, Speaker Tkachenko had to persuade his colleagues, particularly the People's Democrats and Progressive Socialists, to pass a resolution proclaiming the Cabinet's performance unsatisfactory. In the end, there were 230 ayes.