A repeated first reading of the 2005 budget bill is scheduled at the Verkhovna Rada for Nov. 3, but it is anyone’s guess whether it will take place and what will happen afterward. Naturally, the frame of mind of the Ukrainian MPs will very much depend on what happens after the first round of the presidential elections; even so, the parliamentarians have nothing to fear even if the budget bill falls through.
Be that as it may, a budget bill is a very special instrument that both the MPs and the general public should discuss at length and in depth — especially the agrarian clauses, budget items whose implementation has a direct bearing on the living standard and stability of financing.
Suppose we start by stating that the agrarian clauses of the 2005 bill offer some surprises — both pleasant and disagreeable ones. Among the pleasant is the absence of funding for the loudly proclaimed Law “On State Support of Ukrainian Agriculture.” As reported earlier, this piece of legislation lists the farming products that are subject to state regulation (e.g., wheat, rye, barley, oats, corn, wheat or wheat-barley flour, soybeans, flax, rape, sunflower, hops, sugar beets). The Ukrainian state had intended to regulate this turnover through commodity market intervention (to keep these commodities between the minimum and maximum purchasing prices). This intervention was assigned to the Agrarian Fund, to be set up “in keeping with established procedures.” The fund was supposed to take control over the State Food Reserve whose resources were supposed to provide for this intervention (in 2005 it planned on adding to the fund 1.5 million tons of wheat and rye, and 180,000 tons of sugar beets, at the central budget’s expense). This law further envisages setting up an agrarian stock exchange, implementing reforms of agricultural insurance, etc. To make all this reality, the authors proposed to allocate some UAH five billion from budget monies.
But the budget bill has not provided for any such allocations; there was no mention of the Agrarian Fund, any farming acquisitions using budget money, commodity market intervention, or an agrarian stock exchange. Moreover, the bill reads that Ukraine’s entire agribusiness sector will have UAH 4.3 billion’s worth of appropriations in 2005 compared to five billion requested only for the state regulatory system.
A closer look at the budget bill also shows that there is an increased budget item financing the agrarian sector. The bill reads that UAH 4.3 billion is to be spent on the countryside, which amounts to more than 6% of the 2005 budget expense items. In 2004, it was UAH 2.58 billion (slightly over 4% of total budgetary expenditures); in 2003, it was UAH 1.2 billion (a little over 2%), meaning that the agrarians’ appetite is increasing, and more importantly, that the central budget can supply their needs three and a half times better than during the past two years.
Compared to 2003, there will be larger budget appropriations to make bank loans easier on agricultural producers (UAH 175 million compared to the previous UAH 120 million), financial support for farming enterprises (UAH 17.25 million compared to UAH 13 million), and compensation for falling prices of domestic mineral fertilizer and farming equipment (UAH 250 against UAH 190).
All this sounds wonderful, except for the troubling fact that the budget bill has retained sinecures for separate individuals, including budgetary injections into the Pushcha Vodytsia farming business (UAH 15 million compared to last year’s 5 million). Also, the principle of financing the Kolos Health and Sports Society leaves one wondering. Has anyone seen any of their athletes and their heroic attainments? Why should the state allocate another million hryvnias for these rural athletes, raising the appropriation from UAH six to seven million?
Finally, it is safe to say that the perennial criticisms of the system of financing policy vis-a-vis the countryside are still relevant; the budget bill does not provide for a single kopiyka to be paid for the structural and functional transformation of this sector; instead, the appetites of budget-financed organizations are increasing from year to year.
