National finance

The Cabinet introduced the draft budget to the parliament and then almost immediately withdrew it

The Cabinet introduced the draft budget to the parliament and then almost immediately withdrew it
Photo: Reuters

On Friday, December 12, the Cabinet of Ministers registered a draft of the national budget 2015 in the Verkhovna Rada. However, on the following day the document was withdrawn from the parliament. The decision on withdrawal of the draft for revision was approved based on the results of Friday’s meeting of the leaders of the coalition factions with the premier and minister of finance, informed PPB faction leader Yuriy Lutsenko. Later, the press service of the Cabinet confirmed this information, specifying that the coalition members agreed to form a working group together with members of the government to complete the draft budget and also changes to the Tax Code on which the budget will be based.

Neither words nor figures

Such tricks with the registration and immediate withdrawal of draft budget laws have been used by many governments over the history of independent Ukraine. This is essentially technical registration of a non-existent document. The authorities are forced to resort to such manipulations in order to observe the decencies and corresponding legislative norms, which clearly regulate the practice of submission of a draft budget to the supreme legislative body.

The VR Budget Committee has not yet seen the draft or the macro indicators. «Last week we met with the representatives of the Ministry of Finance. We received no answers from them as to the macro indicators, the hryvnia exchange rate or the forecast of the minimum wage,» member of the VR Budget Committee Mykola Skoryk (Opposition Bloc) said. Member of the committee Oleh Medunytsya (People’s Front) confirmed that the body has not yet been provided with the details of the draft national budget.

Yesterday, VR Budget Committee Chair Andriy Pavelko (Petro Poroshenko Bloc) did not respond to the inquiry of the publication saying that it was a day off. A day earlier, however, he told journalists the process of adoption of the budget is taking place with a delay. As it turned out, he also did not know the details. «I am not ready to provide any figures yet,» said Pavelko. He said that the minimum task is to adopt the budget before December 26.

VR Vice Speaker Andriy Parubiy (People’s Front) confirmed this saying that the government should re-submit the revised draft by December 20. «Under the Budget Code, the committees have two weeks to consider the draft budget, but at the coordination councils we said that the parliament may assume the obligation of considering this document in a shorter period of time,» said Parubiy.

Skoryk believes that the discussion may in fact take much less time. «The government will try to introduce the draft of the national budget practically without discussion and push through its adoption using the coalition. If the draft were to be discussed based on the disconnected data that comes from the Ministry of Finance, the debate will not inure to the benefit of the government,» said the parliamentarian. He believes it is possible that the Cabinet will submit the draft budget for the committee’s review on December 25 and the document will be urgently approved in the committees and on the following day will be introduced to the VR.

Such a scenario is extremely undesirable says Medunytsya and if there is not enough time to vote for the budget this year, it can be done in January, given that this was the case on more than one occasion in the past. «Limitations in this case are set only on capital expenditures. The rest is based on 1/12 of the budget of the previous year,» the people’s deputy reminded.

Instructions from the top brass

Some of the experts and people’s deputies link the possible postponement of the approval of the national budget for next year with the IMF mission working in Ukraine. They argue that the final version of the draft national budget for 2015 can be expected in the parliament only after the mission completes its work (it is planned that the IMF mission will stay in Kyiv until the end of the week).

Noteworthy, yesterday First Deputy Managing Director of the International Monetary Fund David Lipton said that at the moment «technical discussions are being conducted», while «a mission to conduct policy discussions in the context of the fund-supported program is expected to return to Kyiv early next year». It is possible that the national budget will be adopted by that time and the fund’s representatives will be able to see to what extent their recommendations were taken into account.

Meanwhile, the small tidbits of information about the budget figures that leak into mass media are extremely contradictory. For instance, Deputy Minister of Economic Development and Trade Roman Kachur said the national budget deficit in 2015 will amount to 3% of the GDP as envisaged by the government’s action plan. In his turn, Deputy Minister of Finance Denys Fudashkin said the deficit is forecast at the level of 3.8% of the GDP. At that, according to the Ministry of Finance, the nominal GDP in 2015 will be UAH 1.72 trn.

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