Deep Dents in “Even” Budget
On November 30 The yellow budget bill (from the color of its cover) revised by the cabinet for the second reading was debated in the morning session of Verkhovna Rada. It was supposed to have taken into accounted legislators’ proposals, and Presidential Representative Roman Bezsmertny told The Day, “After yesterday’s and the day before yesterday’s conferences (between the parliamentary majority, the President, and Premier — Auth.), I see no problem in the budget bill being approved, article by article, in the second reading.”
While we talked we could hear muffled sounds from the crowd outside (and parliament has thick walls!), bullhorns, and we could see cloth streamers. Judging from the placards those gathered were mostly schoolteachers and what is known here as “workers of culture.” I asked if the lawmakers would pay any attention, and Mr. Bezsmertny said, “Such rallies happen quite often, sometimes they are real and other times are staged and paid for. Thus — well, the committees worked on separate [budget] items rather well. The expenses were increased, but neither the government nor the committees can meet all the union demands.”
People’s Deputy Anatoly Kinakh, President of the Ukrainian Association of Industrialists and Entrepreneurs, said that the budget bill submitted for the second reading had undergone practically no serious changes from the standpoint of solving the most important problem facing this country in the budget process for the next year: providing conditions for structural changes in the economy, particularly in terms of GDP which, in the final count, determines the competitiveness of Ukrainian products. Among the issues remaining open Mr. Kinakh listed the increasing tax burden, noting that the VAT rate does not correspond to the actual condition and capacities of the Ukrainian economy. He quoted the President as saying that VAT is destroying our economy. Mr. Kinakh believes that there are no solutions to these problems in the budget bill. Still, the majority confidently overpowered the resistance offered by the Communists (they actively participated in debating every budget item but never took part in the vote, not even with regard to the social clauses), Progressive Socialists, and even Yabluko (all three factions showed a quite good coordinated performance), especially when it came time to discuss Item 5 of the budget, setting higher energy pipeline transport rates. After two rejections, the natural gas lobby, threatening higher prices, had to retreat.
Something interesting happened when the Solons proceeded to deliberate the budget privatization returns clause. Oleksandr Riabchenko, chairman of the Privatization Oversight Committee, discovered that the cabinet had, for reasons best known to itself, decided to use dollars instead of hryvnias, so the coordinated UAH 5.9 billion was now $1.5 billion. Of course, there is a big difference between the two, the more so that the government can now use proceeds from overfulfillment of the privatization program to repay the public debt and to channel this money into state investment. It was only after Speaker Ivan Pliushch’s witty remark about missing the boat that some of the deputies realized: the Cabinet now could manually handle two billion hryvnias, this being the difference between $1.5 and UAH 5.9 billion. Mr. Riabchenko explained the collision to The Day, saying that excess privatization returns will not become the Cabinet’s feeding trough simply because the trough will be empty.
In Deputy Oleksandr Yeliashkevych’s words, most of the budget items passed “smoothly” through Parliament in the second reading. Mykhailo Brodsky told The Daythat the budget with taxes remaining high and no pension and wage adjustments for spending units cannot solve the problem of raising living standards. He added that such standards has not risen but dropped this year, with consumer price increases coming in the face of stable wages and salaries. Judging from Mr. Brodsky’s and other lawmakers’ mood, the stumbling block during the third reading, scheduled for December 7, will be mostly Supplement No. 3 (allocation of budget expenditures).
