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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

is what the Cabinet tries to do, paying old debts by piling up new ones

19 October, 1999 - 00:00

Pension Fund head Borys Zaichuk spoke optimistically, addressing the Verkhovna Rada on Government Day. According to his statistics, arrears on pensions had been reduced by UAH 363 million — i.e., from 1.97 billion to 1.61 billion as of October 1 this year. Also, allowing for monthly indexation, the said arrears grew by UAH 46 million a month. And he identified the finance sources: duties on purchases of foreign currencies as well as on sales of cars and on jewelry. Viewed from this angle, the government looked like so many Robin Hoods, taking from the rich to make the life of the poor better, even if only a little.

Simultaneously, Mr. Zaichuk pointed to an increase in pensions paid in kind this year (UAH 479.2 million, or 144.2 million more than was registered as of November 1, 1998). And the fact was noted by Verkhovna Rada Accounting Chamber head Valentyn Symonenko, stating that the existing amount of payments in kind on account of social debts is too large. Mr. Symonenko considers this the second reason for mounting social debts, the first being that the Cabinet, Finance Ministry, and State Treasury are violating the Constitution and budget law. He also cited statistics showing that in 1999 servicemen were given pay raises on the strength of their rank and position, but the problem of financing state budget items was not solved.

Half a billion hryvnias was stipulated by the 1999 budget to raise schoolteachers' salaries, he said, but was reallocated for other purposes, adding that back wage reductions this September meant the budget deficit going up UAH 400 million in nine months, compared to the marginal annual amount. In addition, for the first time the Pension Fund budget does not reflect state and local budgets' commitments and the income items include only current payments.

Finally, Finance Minister Ihor Mitiukov declared that the situation with the domestic state debt has been stabilized. Without going into details, let us take the minister at his word on his “slowing internal debt increment rate” this year. The rate is actually 12%, meaning that the debt still exists and is rather significant. Hence, there would seem to be little if any reason for euphoria about back pension reductions, for this is only part of the domestic state debt, which is being reduced by increasing debts in the neighboring spheres.

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