Ukraine has broken its record – the MPs have voted for the state budget before the beginning of winter (usually, they do it just right before Christmas). November 23, 240 MPs voted “for” and thus adopted in the second reading and in general the draft state budget for 2019. We tried to figure out how Ukrainian parliamentarians have redistributed a trillion hryvnia (USD 36 billion)
The process of budget adoption was tough and tensed. The parliamentarians were considering changes to the budget code, and the first stumbling block was the distribution of funds among agricultural producers.
“Verevsky (Andriy Verevsky co-owner of Kernel Group, world's leading producer and exporter of sunflower oil, - Ed.) wants 7 million USD to support the purchase of cars, and Kosyuk (majority shareholder of Myronivsky Hliboprodukt, Yuriy Kosyuk, - Ed.) strongly denied the limitation of the state support, and nobody in the session hall supports him. There is no consensus yet,” one of the influential agrarian deputies explained.
In addition, long disputes were around the budget amendment #165, the adoption of which was lobbied by representatives of the Radical Party faction. It proposed to leave part of the profits of unitary enterprises under the management of the Academy of Sciences for their own needs until 2023. Supporters of the amendment called for the support of the Academy of Sciences.
“As for the state, this is a small amount of money – a million dollars, but for science, it means a lot,” Viktor Halasyuk from Radical Party faction told.
Opponents of this amendment noted that, in fact, the amendment “is no more than a fraud,” and the Academy will actually receive “no more than 300,000 USD.”
However, in the evening, parliamentarians did find a compromise and supported the changes to the Budget Code. A compromise proposal was adopted, so now the amount of support for agricultural producers is 1% of the output. In 2020-2025 this bar increased to 1.5%. The amount of net profit, which remains with state-owned enterprises, was also limited. According to our sources in the composition of coalition and opposition factions, it is planned that the companies of mentioned Kosyuk and Verevsky would receive 36 million USD. In addition, parliamentarians found a consensus and on the 165th amendment – a part of the net profit of the Academy's enterprises would be directed exclusively to support the innovations.
Another obstacle was the discussion around the creation of the Ministry of Veterans. However, at the evening meeting, the MPs supported the candidacy of the former Poroshenko’s press secretary, Iryna Fryz, to the post of minister of veterans, and thus unblocked the creation of this ministry. A short time later, Oksana Markarova was appointed Minister of Finance.
"At one of the meetings of the Petro Poroshenko’s Bloc faction, Prime Minister Groysman admitted that if there was an opportunity, he would have appointed Oksana Markarova, not Oleksandr Danyliuk, as finance minister. Now the exchange took place. The Minister of Finance is desirable by Prime Minister and is tolerated by the Presidential Administration, but he had to share some flows of the Ministry of Social Policy, some of which, obviously, would go to the Ministry of Veterans Affairs,” our sources explained.
That evening, Minister of Agrarian Policy Taras Kutovy was fired too. According to our sources in Petro Poroshenko’s Bloc faction, the Udar group insisted on dismissing the minister. Thus, the ministry is actually driven by Maksym Martyniuk, who is close to PM Groysman.
The MPs have also considered amendments to the Tax Code. And then, diamond cut diamond. Parliamentarians failed to adopt the amendments to meet the interests of various financial and political groups, and the situation seemed to be critical. But after long negotiations, around 5 am, the MPs adopted amendments to the Tax Code. The vote for an amendment on the preferential rent for iron ore mining made the voting effective. It should be noted that the companies of businessmen Rinat Akhmetov and Igor Kolomoisky are involved in this business.
Moreover, a positive result was reached due to the support of the amendment on access to the real estate base of State Property Fund. The lobbyist of the amendment is Vidrodzhennia group, and one of its members is beneficiary (MP Anton Yatsenko).
In general, budget revenues were increased by 642 million USD, compared with the first reading, and exceeded 36 billion USD, mainly due to the increase in gas production rents. Ukraine’s Cabinet of Ministers hopes to get 8 million USD from customs clearance of cars with European license plates. The president has already signed the relevant bills.
As for the expenditure side, the additional funds were allocated for financing the power structures and PR crap of the head of state. The Cabinet of Ministers supported the allocation of 36 million USD to finance the Foundation of the President of Ukraine. These funds are planned to be spent on partial reimbursement of expenses associated with an increase in gas tariffs and on the support of the educational and scientific programs.
The districts to receive 175 million USD; 5,3 million USD to go for the repair of sports complexes. It is proposed to spend a little more than 178,ooo USD on the State Fund for Regional Development.
Verkhovna Rada would receive additional 7,3 million USD.
The state management of affairs would receive additional 6,1 million USD, and in general, it would get almost 89 million USD. In particular, additional million USD to be allocated for "fundamental and applied research in the field of public administration." According to one of the members of the Budget Committee, this is a loophole for stealing the budget money.
The Cabinet has received an additional 7,3 million USD. Funding for the judicial system has also increased. So the Constitutional Court would get another 2 million USD, compared with the first reading.
In comparison with the first reading the Prosecutor General’s Office has received additional 3,5 million USD and, in general, it would get 260 million USD. Additional 28 million USD would be received by the Ministry of Internal Affairs (in general, 3 billion USD). The Ministry of Defense received an additional 36 million USD for the disposal of ammunition and maintaining the viability of warehouses. Thus, its total funding amounted to 3,75 billion USD. Ukraine’s Security Service has additionally received 5,3 million USD, bringing its budget to nearly 343 million USD. The state bureau of investigations to receive from the treasury 40 million USD, and National Anti-Corruption Bureau to get some over 28,5 million USD.
The Ministry of Education was allocated additional 142 million USD (and 1,5 billion USD in total). The Ministry of Health has received additional 71 million USD, and its total budget amounted to 1,4 million USD.
Macro indicators of the state budget did not change as compared with the first reading. The minimum salary, in accordance with the document, will rise to 149 USD, and the cost of living will exceed 71 USD from December 1, 2019.
Traditionally, the MPs save on the social benefits for certain categories of citizens. These are benefits related to the medical care and housing of the police officers (they would operate taking into account the resources of local budgets). The similar situation is with the preferential provision of housing for servicemen and their families, and the cost of subsidies has been reduced to 2 billion USD. It is planned that 714 million USD would be paid in cash.