The Ukraine state budget that was adopted without debate

2014/01/21 • News

Photo: ipress.ua

The 2014 state budget was adopted in whole on January 16, 2014. The Party of Regions faction needed less than two days to get the document approved.

On the first day, Wednesday, January 15, the Parliamentary Committee gathered around midnight and decided to recommend the budget bill for adoption.

On the second day, in total turmoil, when Speaker Volodymyr Rybak was locked in his reception room, and the hall was dominated by complete chaos, the document was adopted by a simplified procedure.

This was made possible by the appearance of the First Vice-Speaker Ihor Kaletnik in the hall, whom the opposition had also been blocking in his office.

However, it was Kaletnik who opened the session. He declared that due to the opposition’s actions, the vote on the budget would take place without parliamentary debate.

“The opposition MPs are preventing the budget draft to be examined in accordance with the regulations, they hamper the consideration of the question, they are blocking the speaker’s podium, they hinder the work of the chairman of the plenary session, and the voting of other MPs. Reporting on and discussing the budget in such circumstances is impossible, so we will adopt the budget without debate,” he said.

Despite the speaker’s podium being blocked, the vote was held. It was one of the few votes on that day that was carried out through the electronic voting system called “Rada”.

249 votes were “yay” – by MPs from the Party of Regions, the Communists, and some who are unaffiliated. Among the latter was, in particular,  Oles Doniy, who justified his decision on the basis of 30 million UAH being allocated to his oblast in the budget, as he requested.

On Wednesday, during the consideration of the draft budget in the relevant committee, the majority of opposition MPs had been cut off from the process. The session, scheduled to begin at 16:00, started only at 21:45.

Before that, according to the Budget Committee member Alexander Chornovolenko from the Batkivschyna party, amendments to the budget from the Party of Regions majority were considered in the office of committee chairman Eugene Heller.

By midnight the formal part of the event began in the presence of 33 Budget Committee members, who in less than in two hours decided to recommend the draft budget with the Committee’s proposals.

The corrections approved by the Committee in the end were included in the bill which was adopted without discussion by the Rada, and formed the basis for the Law on the State Budget 2014-to-be.

All the recommendations that were included in the bill before the vote can be found in the “committee’s opinion”, published on the Verkhovna Rada’s website. In fact, they clarify what changed in the country’s financial estimates for 2014.

Revenues increased slightly – from 392.4 billion UAH to 392.6 billion UAH, and even decreased for the general fund – from 347.5 billion UAH to 342.7 billion UAH.

At the same time, the rate of spending and lending grew by 15 billion – to 471.3 billion UAH, including the general fund by 6.9 billion – to 409.4 billion UAH.

There were changes made to the marginal limit of public debt; it was increased by 4.4 billion UAH to constitute 584.5 billion UAH.

The basic social rates (living wage, minimum wage) were not changed and remain as in previous versions of the draft budget.

The amount of State guarantees, as in the previous project, is 50 billion UAH. The order of the loans under the state guarantees in 2014 and conditions of supply also will be established by the government. The involvement of loans under state guarantees and their supply conditions will also be established by the government.

In particular, the state guarantees will be provided by Cabinet of Minister’s decision to pay for loans of state enterprises, including State Highways Agency, the Agricultural Fund, and for the investment project “Development of space rocket complex “Cyclone-4 “.

Volodymyr Rybak. Photo: Ukrains’ka Pravda

These enterprises together with spending units are exempt from obligations of providing collateral or other security obligations for the provided 2014 state guarantees.

A new article, #23, appeared in the document, which provides possibilities for the Cabinet of Ministers to additionally issue domestic treasury bonds in 2014 to replenish the capital stock of ”State Land Bank”.

At the same time the sources of general and special budget funds were amended. Changes have been made to some items of income and expenditure with appropriate adjustments to the totals.

As expected, most changes were made to the budget expenditures – more than a hundred items. So what did the Budget Committee recommend to the Rada, and what did the majority vote for?

  1. The expenditures on “service and organizational and logistical support of the president” were increased by 32 million UAH. Therefore, this expenditure item increased to 314 million UAH. In 2013, it totaled 302 million UAH. So servicing Viktor Yanukovych will cost taxpayers an extra 12 million UAH.

  2. Expenditures rose by 20 million UAH for the air transport of senior officials. Total expenditures in 2014 under this heading are 208 million UAH (in 2013 it was 188 million UAH).

  3. The MPs did not spare any money for protecting government agencies and administrators. After leaving the Budget Committee, expenses in this section also rose by 40 million UAH, constituting 357.5 million UAH (315.2 million in 2013). So now the authorities are not skimping on protection, as well as on the “enforcers”.

  4. Expenses of the Ministry of Internal Affairs also rose by 2.80 billion UAH, giving a total of 18.664 billion UAH. In 2013 the total was 16.06 billion UAH. In particular, the paper adopted a new budget program “Development of the State Border Service,” which, according to the MPs, is in need of significant investments. Also, the border and immigration services are part of the Interior Ministry. The day before, the deputy chairman of the Budget Committee of the Verkhovna Rada Oksana Kaletnik insisted that it is not wise to speculate on the issue of the Interior Ministries’ funding, because in 2014 it was expanded by two departments.

    Photo: Ukrains’ka Pravda

  5. The Security Service is not far behind. The “Chekists” saw an increase in expenditures by 130 million UAH: 90 million UAH to provide for activities and operation, and 40 million UAH for housing construction for the Security Service military. The annual costs for security agents thus increased to 3.584 billion UAH. In 2013, they were 3.452 billion UAH. The growth dynamics are consistent.

  6. And there are the courts. The Supreme Court was assigned an extra 10 million UAH to “deliver justice”, bringing the total expenditures of the Supreme Court to 115.4 million UAH. This is 10 million UAH more than in 2013.

  7. Expenses for public radio and television programs rose by 100 million UAH as compared to the initial draft budget, summing to a total of 786 million UAH – 33 million UAH more than in 2013.

  8. The MPs also increased the expenses of foreign diplomatic missions in the final version by 90 million UAH, bringing in a total of 902.2 million UAH. This is 48 million UAH more than in 2013.

  9. It is also not clear why the budget committee increased costs for providing the international image of Ukraine by 2 million UAH,(totalling 3.2 million UAH), and for creating a positive investment climate by 9.7 million UAH to 45.5 million UAH.

  10. The maintenance costs of the State Statistics Service, the published data of which more and more resembles a weather forecast for a year, will also rise by 17.5 million UAH. In 2014 this institution will cost Ukrainian taxpayers 664 million UAH.

  11. The eastern provinces were not left out, either. The Budget Committee brought about several new programs: building a new medical research center in the Donetsk oblast – 70 million UAH, building a modern regional ambulance hospital in Donetsk – 50 million, a bail-out for the Donetsk city budget for a loan repayment on the renewal of the bus and trolleybus fleet under “Euro 2012” – 110 million UAH. The new program to provide subsidies to the Luhansk region for upgrading and constructing buildings of the Avant-garde Luhansk Regional Sport and Recreation Centre is particularly impressive – 110 million UAH. Surprisingly enough, the address and name of this center is identical to the address and name of the stadium of Luhansk’s Zarya football team. Its owner from 2009, according to media reports, is chairman of the Budget Committee, Eugene Heller.

    Eugene Heller. Photo: Ukrains’ka Pravda

  12. As for sector programs, the MPs allocated an unprecedented amount of spending to the coal and peat industry. 185 million UAH on restructuring the industry,  65 million UAH on safety measures, 364.3 million UAH on a new program to support the construction of coal and peat mining enterprises and their refitting.

  13. And the last item approved by the Budget Committee: funding programs that support the creation of wholesale markets of agricultural production – 200 million UAH. Not long ago, Ukrainians experienced the collapse of the “Stolychniy” market built by the same program.

This set of amendments creates an additional 1.9 billion UAH of expenditures. Perhaps the construction of hospitals is right, but why only in this one area? The country could well have lived without the other items of expenses.

Finally, among the changes introduced in the 2014 budget by the Profile Committee, several positive ones can be found.

  1. The total funding for the armed forces from the general fund was increased by 530 million UAH to 14.058 biliion UAH.

  2. Government funding for the Affordable Housing Program, which provides for compensating 30% of housing prices by the State, was doubled.

  3. New budget programs to finance local budgets for schoolchildren’s breakfasts – 607 million UAH, projects to equip health facilities with high-tech equipment – 140 million UAH, providing housing for the disabled, liquidators of the Chernobyl catastrophe, and retired servicemen – 300 million UAH – were created.

  4. Expenditures for rehabilitating children with cerebral palsy were increased by 48 million.

  5. Spending was also increased on “social, employment and vocational rehabilitation of disabled persons” by 300 million UAH.

  6. A new budget program to modernize and replace elevators in residential buildings (200 million UAH), and to refurbish and construct street lighting using energy-saving technologies (100 million UAH) also saw the light.

Translated by Alya Shandra from http://www.epravda.com.ua/publications/2014/01/17/415384/

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