"Oligarchic deal" or "salvation of state": Ukraine's budget 2017

Author : Yana Polianska

Source :

Key principles of the document after two readings remained unchanged. In priority are defense (5% of GDP) and health care, education and social standards, diplomacy and agriculture, the creation of the road fund, as well as energy efficiency, decentralization and culture
21:22, 22 December 2016

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After nearly 19 hours of work of the Verkhovna Rada, in the morning of December 21 deputies approved the state budget for next year. It was supported by the factions " Poroshenko’s Block ", "Narodnyi Front", "Radical Party" and the deputy groups "Vidrodgennya" and "Volia Narodu." Instead, "Batkivshchyna", "Samopomich" and "Opposition bloc" as promised before, rejected the draft budget. These MPs were not convinced neither because of endorsement of the Budget Committee nor the Government's arguments about balancing of the state budget-2017.

"Oligarchic deal", "salvation of the state" and "human-centered budget" – that’s how the deputies and officials called the budget that Parliament adopted at 5 a.m. They didn’t want to go home without adopting the key state document if voting for the budget was postponed to Thursday - IMF would have gone on vacation, and Ukraine could lose the opportunity to receive the next tranche.

Starting an evening session at 16 o'clock, only at 4 a.m. Ukrainian parliament received a positive conclusion of the Budget Committee and the final consolidated figures. And after 45 minutes needed 274 votes for basis and in general were found.

Traditions on adopting budget at night are strong

At first the representatives of the Cabinet came to persuade MPs to vote.

"The Government has submitted a budget on time in compliance with all terms and procedures, but the tradition to make budget at night were stronger - said, speaking from the tribune, Finance Minister Olexandr Danyliuk. - But the principles of our budget are - realism, perspective and transparency. "

Key principles of the document after two readings remained unchanged. In priority - defense (5% of GDP) and health care, education and social standards, diplomacy and agriculture, the creation of the road fund, as well as energy efficiency, decentralization and culture.

GDP growth is prescribed at 3% and inflation – at 8.1%. State employees’ salaries will be increased, speaking about teachers and health workers – significantly increased.

Minimum wages doubled: from 1600 UAH to 3200 UAH. Wages were untied from the rates of officials and judicial penalties. It is through this move the government hopes to bring the salary out of the shadows and increase budget revenue from VAT. And also increase the labor remuneration fund and, thus, increase Single Contribution payments to the Pension Fund.

"We will provide defense costs, build roads, support the agricultural sector. We will allocate six billion for the reimbursement of medicines. And both decentralization, and the minimum wage – this is something for which we will vote now, "- urged MPs to vote Ukrainian Prime Minister Volodymyr Groysman.

"Read the rules, learn financial part”, - Groysman

Not all members of parliament optimism shared the government’s optimism. The deputy head of the "Batkivshchyna" party Serhiy Sobolev, holding a thin printout of data on the state budget was indignant: how could they ask Parliament to vote for the document without applications?

"This budget - a sentence the government, who prepared it" - said Sobolev. He also listed the key positions because of which "Batkivshchyna" does not support this document: the main financial burden, he said, would be borne by pensioners, local governments and farmers.

After this Groysman advised Sobolev to read the rules. More than 300 pages of amendments to the state budget were handed out to the deputies before the first reading.

"Read the rules, learn financial part. I always said that you are professional mediocrities, I confirm this," he added.

Oligarchic deal?

But head of the "Samopomich" faction Oleg Berezyuk blamed the fact that the budget represents the interests of big business.

“Is there some words about a person in this budget? - said Berezyuk. – It’s difficult to vote for such a document. " In response, the Prime Minister called the budget "human-centered" and reminded on increasing of social standards from January 1.

Excise tax on alcohol and cigarettes increased

Overall, from January 1, Ukrainians would see a lot of innovations. For example, 2% fee to the Pension Fund from the currency exchange was canceled. But excise taxes on alcohol and alcoholic beverages increased by 20%, on tobacco products - by 40%.

Details of state budget-2017

Parliament also shifted part of expenditures in the education and healthcare sectors on local budgets. And from them, not from the state budget would be paid medical facilities utilities. Among other things, the deputies decided that Ukrainian National Bank in 2017 should transfer to the state budget not 41 billion UAH but 45 billion. In its December report on financial stability National Bank has called such a decision limitation of its independence.

After odious increase of deputies’ salaries and then - after abolition of this decision, Parliament still added a fifth of the funding for the Verkhovna Rada. And much of that money would be spend on labor remuneration. Some funding was added for Prosecutor General's Office and Special anti-corruption prosecutor's office.

Also additional funds were allocated for the restoration of architectural monuments - the Town Hall in Buchach and Zhovkivskyi castle.

MPs found additional budget money for Heart Institute and the National Cancer Institute.

Voting for the introduction of the next version of the draft law on special confiscation Verkhovna Rada failed on Tuesday.

Last year budget (State budget 2016) was adopted also at night on December 25, 2015. In 2014 budget for next year was adopted traditionally at night too.

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