As the Budgetary Code requires, the government’s “grand plan” of the collection and distribution of revenues came into the hands of parliament on September 14. Before this important and, to some extent, turning point in the budgetary process, ministers had to settle a few disputed issues “in search of a suitable solution.” Then we are going to witness more open debates in Verkhovna Rada — more open because the Cabinet of Ministers still prefers drawing up the “economic Constitution” in strict secrecy.
Here are the key points revealed by Prime Minister Anatoly Kinakh at his September 11 press conference. Firstly, the Cabinet expects to see the nominal GDP to reach UAH 247 billion next year, up 4% on the last year’s figure, the hryvnia’s average annual exchange rate to be $5.57, and inflation to run at an average annual 7.7%. It is projected that consolidated budget revenues will touch UAH 62.6 billion (a pool of UAH 50.5 billion). Besides, if nothing changes by September 14, the Cabinet will offer parliament a budget with a deficit “of UAH 0.8 billion (or 0.3% of GDP) exclusively by the special fund, with a pool zero deficit.”
Mr. Kinakh told the press conference that the next year’s privatization earnings (an estimated UAH 2 billion) would be channeled “not into the state budget pool but into the financing part” (incidentally, the premier noted the government would insist on privatizing Ukrtelecom in 2003). He stressed the government expected fruitful cooperation with parliament throughout the budgetary process as well as having “a realistic and well balanced budget.” Parliament is also expected not only to discuss the draft state budget but also to seek new ways to increase its revenues by improving the VAT and excise collection system, reduce the taxation of individual profits, and pass a package of pension reform laws.
Mr. Kinakh said again that the current budget revenues do not meet the scale of the Ukrainian economy because “huge material and financial resources remain outside the budget.” He emphasized in this connection that it is necessary to solve the problems arising from the fact that economic entities take advantage of the imperfect Ukrainian law to evade taxes, secure unfounded tax exemptions, as well as to stem the flow of contraband.
The premier also advised Cabinet ministers “to assume a firm, rational, and professional position” in order “to prevent the budget from relying on political crowd-pleasing slogans and from being the result of lobbying by narrow political forces or groups.” And, asked by The Day’s correspondent about lobbying, he said, “This occurs all the time.”
