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Ukraine's coronavirus fund runs desperately low?

Author : Anna Peshkova

Source : 112 Ukraine

Experts assure this special fund is something conventional, and the state would find some money "from the outside"
21:05, 20 July 2020

Open source

Try to solve a simple problem. You have 65 billion hryvnias (2,5 billion USD) and a country holding its breath in anticipation of a pandemic. After two months of actively fighting the coronavirus, you have 388 million USD left. Will this money be enough by the end of the year, given that the Ministry of Social Policy is already asking you to finance pensions at their expense?

Related: Only 15% of Ukrainian Covid-19 fund is allocating to healthcare, - StateWatch

Even a junior high school student will tell you that this money won't be enough. As of July 1, only 0,69 billion USD were distributed, and a week later – 1,96 billion USD, adds fuel to the controversy. Social media users are already actively suggesting that the authorities look for the money spent on the fight against coronavirus in their pockets.

The government report on its deals only with the distribution of funds. Yes, there is almost no money left in the fund, but so far it has only gone to departments. A simple example: it was decided to use money from the fund for the construction of roads at the end of June, and in early July, officials reported that they had been distributed. It obviously takes more time to master them. So it's too early to sound the alarm.

But the priority of the distribution of funds in itself is not in vain that causes the righteous anger of Ukrainians. Half of the funding was directed to the "Big Construction" and was hundreds of times higher than spending on mechanical ventilation devices. Was it necessary at the height of the pandemic to allocate 1,27 billion USD for roads, if this is not enough to do a tenth of the necessary work (12,7 billion are needed for major repairs)?

Related: Ukraine's coronavirus fund: Where does the money go?

Business representatives, who paid taxes to the budget in advance during the strict quarantine, were convinced that the funding would go to the social sector. Several tens of billions on roads is a drop in the bucket, which would be more than enough to provide lifelong allowances for the Ukrainian doctors.

The fund included investments in the roads. They were supposed to lead to the creation of new jobs. But does this approach actually save us from unemployment? Until June 9, only 3,500 unemployed out of half a million registered with the State Employment Service were employed in road works. Despite these figures, the authorities still believe that the financing of the "Big Construction" will give the country about 150,000 vacancies.

Economic expert Oleg Pendzin says that so far the money has been divided only formally, and this redistribution can always be changed depending on the situation. But there are big doubts that such redistribution will actually take place.

The authorities allocated 15 times less for targeted needs than for roads, however, they are in no hurry to use these funds. Zelensky reported that as of June 18, hospitals in Ukraine lacked 15% of the necessary equipment, 16% of the staff. Every fourth physician does not have a sufficient number of necessary protective equipment; medical institutions are provided with them only by 73%. And this is after four months of fighting the coronavirus.

Related: Vaccine against Covid-19 to arrive in Ukraine no earlier than spring of 2021

The authorities allocated 97 million USD for additional payments to doctors and law enforcement officers, but in many regions, none of the doctors get these allowances. Responsibility for this was assigned to the local authorities and chief doctors, who allegedly slowed down the process. Although in fact there was no ruling on 300% allowances. In their decisions, the chief doctors could only be guided by the Cabinet of Ministers' order of many years ago on hourly allowances of 200%.

This delay caused the lack of ventilators: for each resuscitation bed, we have only 0.7 ventilators instead of 2. Some medical institutions, on the contrary, were in such a hurry with purchases that they purchased ventilators at exorbitant prices due to the facilitated tender procedure. We have yet to hear the results of the audit of these expenses, which the Prime Minister requested from the Ministry of Finance. Analysis of tenders for Prozorro suggests that this check would reveal a lot of interesting things. For example, the fact that the Kirovohrad region purchased ventilators 2.5 times more expensive than their average cost. Every third device that Kyiv City Clinical Hospital No. 17 received does not work, every second device is not intended for the treatment of coronavirus at all.

If we talk about real spending, then, according to the chairman of the Accounts Chamber Valeriy Patskan, as of the end of June, only about 4 billion were used. Of these, about 2.4 were sent to medical institutions.

Related: WHO assumes global vaccination from Covid-19 to commence in mid-2021

There will be no funds left in the coronavirus budget to correct these "mistakes" and procurement in the event of a second wave of the pandemic.

Economic expert Oleg Pendzin assures: this special fund is something conventional, and the state will find money "from the outside."

In addition, a change in the exchange rate policy of the National Bank can save the situation.

Historically, the exchange rate tap-dancing on a rake takes place in the country - hryvnia is included in the budget estimate cheaper than its actual indicators. There is a systematic hole in the budget because tax revenues are tied to the value of the national currency. Last year, for example, the budget received less than 4,35 billion USD.

However, now Kyrylo Shevchenko has become the new head of the National Bank. Economists agree: the views of the president's candidacy are fundamentally different from those of his predecessor and completely agree with the position of the head of the country regarding exchange rate policy. Volodymyr Zelenskyy believes that the actual price of the hryvnia should coincide with the budget.

Experts assume a large-scale emission of the hryvnia. Simply put, money can just be printed. NBU will give loans to commercial banks. Banks will use these funds to buy profitable government bonds, domestic government bonds, and the money printed by the NBU will be transferred to the budget. The phenomenon of emission is associated with something negative, although in itself it is neither bad nor good.

Related: Zelensky hopes second wave of Covid-19 bypasses Ukraine

If they went to investment projects, it would be positive for the country. But, most likely, these will be social coronavirus payments, which will lead to higher prices. It's simple: the volume of the commodity mass does not change, but there becomes more money in the system. Inflation will also lead to the budget being executed. In the country's draft budget, it is laid down at 9%, but in reality, it is only 3%. This indicator affects the calculation of the tax base.

So there will be money for the new coronavirus fund. However, it is hardly worth waiting for its official formation during the pre-election period.

There are other items of expenditure in the budget that are actually anti-coronavirus but do not belong to the fund. They can be designated without reference to Covid-19, which will allow using money outside of this fund and not losing electoral points before the elections.

 

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