Cabinet Wants to Cut State Budget

According to the Ministry, foreign borrowing has not been successful due to the global financial crisis (while the government tried not to notice that even under the crisis the international financial entities continue to massively credit Latin America). And financing expenses through government bonds has been called problematic.

Thus, after the first month of budget performance, the government did nothing but predict an almost Hr 2 billion "shortage." Interfax-Ukraine reports that budget financing as of February 15 had a negative value of Hr 302 million. The situation seems to be deteriorating before our eyes, for only a week ago Deputy Premier Serhiy Tyhypko related the possibility of a sequester in the second quarter.

Meanwhile, experts of the Ukraine-Europe Legal Consulting Center estimate the lack in budget funds caused by Ukraine's obligation to pay about $2 billion in foreign debt (while a maximum of $1.6 billion is expected from foreign creditors) at $560 million. This is three times more than the planned sequester. According to the UELCC experts, if the requisite funds are not paid, the consequences of bankruptcy and default will be destructive to the nation's economy and lead to even worse impoverishment of its population.

In these experts' opinion, budget cuts should be considered primarily for the irrational structure of the executive branch.

Vitaly Melnychuk, Deputy Chairman of the Parliamentary Accounting Chamber, told The Day that the government should be concerned not only with reduction of expenditures, to which it will finally be forced, but also with enhancing revenues. However, the government considers the latter option obsolete, he said.

Before the upcoming presidential elections, a sequester is most likely to cause many problems for the executive, both with the people and Parliament. Budget cuts will entail strikes, meetings, and picketing by workers in the sectors affected. Consequently, it is not surprising that as recently as Monday before last Deputy Speaker Adam Martyniuk could not even imagine someone's announcing a sequester before the elections, "even if the budget goes to ruin". In addition, Verkhovna Rada is constitutionally bound to adopt any changes to the law On the State Budget. Deputy Chairman of the Budget Committee Yevhen Zhovtiak informed The Day that it is premature to discuss this issue now, because the government "has not utilized all of its capabilities to collect revenues; in particular, there have been still no instructions concerning the distribution of Hr 5.2 billion obtained through mutual offsets for energy supplies.

Actually, Parliament can be dispensed with. The law On the Budget System, which conforms to the Constitution, allows the President to unilaterally sequester funds. But then three questions arise: what will the Constitutional Court say; what can such a President expect in the elections and the simplest one: why did Verkhovna Rada adopt the budget at all?