President Kuchma signed the bill On the State Budget of Ukraine for the Year 2000. At the same time, Interfax Ukraine reports, he addressed letters to Speaker Ivan Pliushch and Premier Viktor Yushchenko, stressing that in signing the budget bill he proceeded from the understanding that the budget program was the result of a compromise reached by Parliament and Cabinet, as well as from the need to pursue a rigid budget policy.
The President further pointed to a number of shortcomings found in the document. Mr. Kuchma believes the new budget is not geared to solving the most pressing and urgent social problems: no allocations for raising minimum wages and salaries; the macroeconomic prognostications underlying the budget envisage a decrease in take-home pay due workers and office employees. The President stressed the need to recompense the loss of some of the revenues due the army and law enforcement officers, resulting from the liquidation of concessions and compensations, adding that Parliament and the Cabinet should take “energetic and timely measures to mitigate any possible negative consequences caused by the budget’s shortcomings.” This primarily refers to the problem in internal budget relationships. Mr. Kuchma regards as “abnormal” the fact that all regions, except Kyiv and the Autonomous Republic of the Crimea, must live on subsidies from the national budget. In addition, he believes the new budget program “does not contain the prerequisites required to substantially ease the tax burden, which is very important in securing economic growth and improving the financial status of enterprises, primarily in the sphere of production.”
People’s Deputy Oleksandr LAVRYNOVYCH said when interviewed by The Day, “This budget program was prepared in conditions best described as extreme, when no one could bring all of its provisions into full conformity with the legal and constitutional norms.
“As for the President’s critical remarks concerning the deficit-free status of the regions and budget, the issue was debated between Parliament and Cabinet and at the time the Chief Executive took a stand similar to that of the budget committee. Besides, I think that when the President’s message was being prepared not all the parameters of tax burden regulation were properly assessed. If we start cutting taxes we must make fundamental reductions in the budget revenue items. Thus, when passing the budget bill we had to either retain the credit balance and budget deficit or curtail sectors unable to survive under the circumstances. In other words, if we wanted to ease the tax burden and increase wages we had to have a different source of income to provide for such expenditures. Neither the Cabinet, nor Parliament could find one Maybe some of those rubbing shoulders with the President know where this source is. If so, they should have broached the subject earlier, when working on the draft budget program. Yes, the President is absolutely right, but I don’t know how this can be carried out using the budget bill passed by Parliament.”
People’s Deputy Inna Bohoslovska says the budget program was deliberated with unprecedented pressure from the IMF demanding compliance with macroeconomic indices.
“Every critical remark expressed by the President would have been voiced by any sober-minded Ukrainian politician. At the same time, one ought to consider a subjective factor. Finance Minister Ihor Mitiukov is a strict exponent of maximum budget centralization. His position was very strong when passing the bill, acting as the main herald of IMF ideas, so his concepts had to be followed. Now we must adopt a supplement to the budget, because the document as such leaves the regions uncovered; we promised to give them UAH 1,600,000 to keep the local budgets deficit-free.
“As for easing the tax burden, the issue must be raised, of course, but there is no way we can solve the problem this year. The budget program could not be approved based on a new tax policy, because the previous Cabinet was opposed to changes in the tax laws. The new Cabinet was pressed for time and could not do anything about the tax policy.”
