Verkhovna Rada passes budget (01/10/99)

Verkhovna Rada passes budget

Reaction from the IMF is seen as critical

by Roman Woronowycz
Kyiv Press Bureau

KYIV - After some 20 votes and with half the national deputies absent, Ukraine's Verkhovna Rada passed a budget for 1999 on December 31, 1998, hours before the onset of the new year.

President Leonid Kuchma had warned that if the Parliament failed to agree on a budget, the parliamentarians and their staff would not receive salaries until a budget was enacted.

Nonetheless, many of the deputies failed to register for the final legislative session before the New Year. Most members of the Communist, Left Center (Socialist and Peasant parties) and Progressive Socialist factions, along with some members of the Hromada faction, did not take part in the voting as a protest against what they consider to be the failure by the national deputies to incorporate a sufficient safety net for workers, pensioners and the elderly into the budget, as well as to guarantee the payment of wage and pension arrears.

"We have never seen a more disgraceful adoption of a national budget bill," Natalia Vitrenko, leader of the Progressive Socialist faction, said before the budget finally passed.

The budget received the bare-minimum 226 votes necessary for approval with merely 235 national deputies registered for the roll call, which occurred only after Verkhovna Rada Chairman Oleksander Tkachenko had brought the issue to a vote some 20 times. In order to convince holdouts to go along, legislators tweaked certain figures during the debate, including the sum for servicing the foreign debt, some of which was re-allocated to boost education and health care financing.

They also agreed to strip 80 million hrv from the government administrative support budget and allocate it to the judicial sector.

The Ukrainian budget for 1999 calls for expenditures of 25.14 billion hrv ($7.2 billion) against revenues of 23.9 billion hrv ($6.83 billion), which is a deficit of 1 percent of GDP and well within the limit agreed upon with the International Monetary Fund.

The government will borrow 610 million hrv on the domestic market and 630 million hrv internationally to cover the budget shortfall, according to Interfax-Ukraine. In addition, the budget sets a cap of $825.5 million in 1999 for servicing the current government debt and budget deficit.

The budget allocates 76.3 million hrv to the legislative branch for administrative support, 444.3 million hrv to the executive and 100 million hrv to the judiciary.

Spending on social welfare was set at 2.2 billion hrv; for the industrial and energy sectors at 2.1 billion hrv; for defense, 1.7 billion hrv; for law enforcement and government security, 1.65 billion hrv; education,1.8 billion hrv; and health care, 530.6 million hrv.

The budget figures had been juggled considerably during the two-month budget process, which featured widely differing proposals from the Cabinet of Ministers and the Parliament's Budget Committee. The initial government budget proposal was submitted and then reworked by the Cabinet of Ministers to adjust figures that national deputies decided did not correlate properly with the new financial situation in the country since the financial crisis in autumn. But, the government's proposed budget was essentially ignored by the Verkhovna Rada's Budget Committee, chaired by Yuliia Tymoshenko of the opposition Hromada faction, which came up with a radically different set of numbers.

In addition to showing a balanced budget, the Tymoshenko budget called for a 33 percent increase in expenditures, to 32 billion hrv, mostly for social programs, and a 300 percent increase in the minimum wage.

That budget proposal, although criticized and discredited by many Verkhovna Rada leaders as unrealistic, passed an official first reading on December 10 before being sent back to the Cabinet of Ministers for further reworking.

However, the final budget proposal that reappeared in the Parliament was far from the Tymoshenko budget. Finance Minister Ihor Mitiukov defended the new government numbers during parliamentary debate on December 29, calling the revenue projections of the Tymoshenko budget unattainable and said that to bring expenditures and revenues into alignment would require major cuts in proposed spending in defense, law enforcement and education.

As it began to appear more certain that the government version of the proposed 1999 budget would win out among the national deputies still interested in approving one before the New Year, Ms. Tymoshenko criticized the government proposal and said she would not work with "corrupt" government authorities to develop a compromise bill.

"My courage lies in the fact that I will not allow myself to be led by the government to gain certain privileges in return for giving the go-ahead to a budget not in the interest of the nation," she said.

After extensive debate, the parliamentarians chose to continue to work on the government bill and rejected the one proposed by Ms. Tymoshenko's Budget Committee.

Communist faction leader Petro Symonenko said the next day that his faction would not support the government budget proposal because it did not adequately address issues in the fuel and energy sector, agriculture, science and education, and did not account for the repayment of wage and pension arrears.

Vyacheslav Chornovil, leader of the Rukh faction, called on fellow national deputies to seek compromise and approve a budget before the new fiscal year or face more criticism. He said all factions would be blamed, "both the right wing and the left wing, as well as those in the middle."

On December 31, after considerable voting, discussion, compromise and more voting, and with the New Year less than six hours away, those national deputies who were still around finally agreed on a budget a majority of them could live with.

| Home Page |