Budget: What’s the Money For?

Verkhovna Rada recently heard the 2004 budget bill. As previously reported, it envisions UAH 58,220.041 million in revenue and UAH 59,916.042 million in spending, with UAH 2,369.347 million deficit ceiling, Compared to this year, the 2004 budget incomes are proposed to be increased by UAH 6.4 billion, or by 9.3%. First Vice Premier and Finance Minister Mykola Azarov says the 2004 budget is balanced and realistic, so that further increasing revenues and expenditures is impossible without legislative changes. Premier Viktor Yanukovych offered this formula during a cabinet meeting: “We must make the money first and decide on how to spend it later; if we change this formula, we will never reach our goal.”

Experts believe that parliament stands a fair chance of having the 2004 budget bill passed within set timeframe (particularly in the first reading; Speaker Volodymyr Lytvyn declared that it would happen not later than October 20). It is also true that the approaching presidential campaign has its impact on the budgetary process. Incidentally, the latter will be the next serious test of strength for VR-cabinet relationships. The Day asked several people’s deputies to comment on the situation.

Stepan HAVRYSH, Parliamentary Majority Coordinator, Democratic Initiatives Group:

Without doubt this budget program will be extremely politicized and the opposition will make every effort to keep the issue a subject of dispute during political discussions. Therefore, the parliamentary majority should enhance its will, come to terms with the government, and arrange for a single united vote in all three readings. I think that this year’s budget process is evidence that the relations between the government and parliament are constitutional. Of course, when the parliamentary majority had its coalition, this also meant obligatory political relationships, since the provisos on the parliamentary majority and the agreement between the government and the parliamentary majority read that the latter’s strategic objective is supporting the government in implementing the next year’s budget bill. However, I also believe that they are profoundly complex. On the one hand, they are not simple and rather public on the other, since the parliamentary majority and the government meet practically every week, at least once, at the coordinating council and with members of the government.

Valery KONOVALIUK, First Deputy Chairman, Budget Committee:

State budget programs have always been political phenomena, yet the way the 2004 one was presented in Verkhovna Rada makes it possible to hope that the deputies will abide by common sense and influence the budget hearings from the perspective of national rather than personal interests. I think there are several key tasks that must be resolved by the committee and Verkhovna Rada in general.

First, we must concentrate not on spending reductions, but on increasing revenues. The tax reform that hasn’t been carried out in full and tax rate reductions entail certain risks especially in replenishing local budgets. For this reason, local budgets should have clearly defined mechanisms of recompensing lost revenues, and their social clauses should rely not on political emotions, but on a gradual introduction of targeted social aid. The state cannot afford to subsidize everybody. We must focus primarily on the most vulnerable strata. We will carefully study the government proposal to reduce tax concessions and annul certain legislative acts. I am sure that this will cause heated debate. At the same time, we have reason to believe that the budget bill will be timely considered and passed within the period prescribed by the budget code.

I think that we will achieve an overall balance; we all know how certain factions feel about financing certain industries and governmental programs. The Ministry of Finance, if and when maintaining constructive cooperation with the factions, will agree to the best calculation of expenditures, and this will make it possible to coordinate a resolution to approve the budget bill at this stage when separate sections and clauses are deliberated.

I also believe that this budget bill shows that the government is making headway in upgrading the budget’s structure, content, and quality of its indices.

Nestor SHUFRYCH, SDPU(O):

The 2004 budget bill will be passed and all the sums calculated. Of course, there will be a debate in parliament. The cabinet will have to prove the feasibility of its revenue items. In addition, next year’s budget spending will be subject to corrections; all of us, particularly the United Social Democrats, are anxious to see how realistic is the minimum wage of 237 hryvnias, and the same applies to the ratio adjustment schedules.

I think that the budget process shows that the majority is functioning and supports the government.

Vyacheslav KYRYLENKO, Our Ukraine:

The budget bill is political primarily because it was supposed to have been prepared by our supposedly coalition government. Second, the bill teems with indices showing that there is some growth in GDP and some social spending, broader social parameters, and more spending on education, agriculture, low-income strata, and so on. However, a closer look at these figures reveals that there is actually no progress. In other words, next year’s budget ideology is aimed at obvious success. Third, the budget hearings will be affected by internal parliamentary divergences addressing not the budget but political issues, including SES status and the constitutional reform. In the end, the bill will be passed. Of this I’m sure, and in within the time-limits prescribed by the constitution. Then, starting on January 1, the newly passed bill will start to be amended. This, unfortunately, is a markedly erroneous Ukrainian policy.

When the budget bill was presented practically everybody criticized it, and at times such criticism came from deputies whether or not members of the majority or opposition. I think it will be a marriage of convenience by the parliamentary majority. The key lobbyists will receive their slices of the budget pie and will have the bill passed by a considerable majority. This means that there is no reason at all to maintain that the majority-cabinet cooperation relies on some concepts aimed at exercising any qualitative changes in the economic, tax, and social structures of this country. What will happen will be a purely financial marriage; it will be short-lived in view of the 2004 presidential campaign.

Leonid HRACH, Communist Party:

A budget program, regardless of the year or body of the state, is always political and social, since the economy, social sphere, and politics are closely interconnected. I would describe the 2004 budget bill as an aspect of the presidential campaign. It would not be all that bad if it focused on social needs, so the electorate would see us playing a more or less fair game. However, this budget won’t be like that. On the contrary, it designed so as to make it possible to bury any amount of money there, so it can be retrieved through budget gaps and spent on various political campaigns, as payments for political technology teams, and so on... In other words, everybody will try to get something out of it, but the key concept is that the budget will provide funds for the presidential candidate representing those currently in power