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Ukraine's state budget 2022: How life of students, retirees, doctors, teachers to change

Author : Anna Peshkova

Source : 112 Ukraine

The 2021 state budget has been called the “Opportunity Budget”
13:00, 20 September 2021

Open source

Finance Minister Sergei Marchenko called it "the budget for investments in a person, country, future," hinting at the social orientation. The government has already voted for the document and submitted it to the Rada.

Judging by the expenditure side of the budget, an ordinary Ukrainian really turned out to be in the center of attention of officials. The document provides for an increase in average wages in our country to 580 USD. For doctors, payments, in general, should increase to 800 USD. However, the fact that these payments will be made at the expense of increased taxation raises doubts about whether the welfare of the people really cares about the authors of the bill.

And will there be money for higher payments? The finance minister admitted: "The experts called the past estimates" bloated "and" unrealistic "in terms of receiving the planned revenues." It seems that the current and 2022 budgets have much more in common than different.

Related: Agricultural sector to receive $300 million according to 2022 State Budget

Spending

All over the world, top managers forecast revenues before planning expenses. In Ukraine, when planning an estimate for the country's main draft law, officials first remember which promises to the population (albeit completely unrealistic ones) they need to fulfill, and only then they look for income for them. So we'll start with expenses.

They are often formed as easy as shelling pears: they take the budget of the previous year and go through it "with a knife". Somewhere cut, somewhere added. If not enough was added, taking into account the coronavirus factor, it is possible to redistribute funds altogether in "manual mode" through the budget reserve fund.

In 2022, expenses are planned even in greater volume than in 2021 - at the level of UAH 1.465 trillion. This is 3,8 billion USD more than the plan for the current year. Due to this difference, "human-centrism" will be realized.

Related: $12,4 million to go to Southern Ocean study according to State Budget-2022

Healthcare

35 billion were added to medicine: the government's planned expenditures are almost double the expenditures for 2019. This should make it possible to increase payments to mid-level specialists to 540 USD, to doctors - to 820 USD. However, according to Oleh Panasenko, chairman of the Free Trade Union of Medical Workers of Ukraine, funds for such a global increase may not be enough.

"For the payments outlined in the draft budget, in fact, the budget should include at least 1 billion USD. Without this, such a jump, if attainable, is only through the dismissal of employees and the reduction of hospitals," said Panasenko in a commentary on 112ua.tv.

Education

Also in the draft budget we see plans to significantly improve financing of education (although not as significantly as medicine) - by 620 million USD. They want to spend the money, in particular, on the construction of the presidential university. True, improved funding for universities will be accompanied by the destruction and consolidation of several dozen universities.

There will be enough funds to raise teachers' salaries - but more modest than those for doctors. Thus, there will be no uniform growth in the average salary in the public sector. But the representatives of the sphere are in dire need of financial motivation. The situation with teachers is no easier than with doctors: in the regions, it is not uncommon for cases when, due to a shortage of employees, the same specialist conducts a lesson to students in two classes at once.

Interestingly, judging by the preliminary document, the amount of funds for teacher training has not been increased.

They also finally drew attention to scholarships, although the new payments are still very modest (less than 100 USD, depending on academic performance). Students of technical schools, after the increase in payments, will still receive a miserable amount - up to 50 USD.

It would seem that the very idea of ​​increasing scholarships is very positive. However, firstly, the number of students who receive scholarships is decreasing, which in itself violates the Constitution. And secondly, the minimum pension in Ukraine is 67 USD, so that pensioners will receive less than students. Absurd.

Related: Draft law on state budget 2022 registered in Verkhovna Rada

Pensions and subsidies

The financial "supplement" refers mainly to point supplements: March indexation, payments to military pensioners, Chernobyl victims. In general, the budget of the Pension Fund will grow, which cannot but rejoice: another 31 will be added to last year's 18,5 million USD.

For subsidies, representatives of the Cabinet of Ministers propose to allocate 120 million USD more than this year.

The shortage of funds for subsidies has arisen despite the fact that the number of recipients has decreased, since the communal apartment has grown by almost 30%. And in 2022, the rise in the cost of utilities, judging by the forecasts of experts in the energy sector, will continue.

It is interesting that the 2022 budget was drawn up based on the population size of 35 million, and this year's budget - from 42 million. But in fact, no one knows exactly how many people there are in Ukraine. The census took place exactly 21 years ago. The validity of the figures that are allocated for social benefits (with the exception of pensions), as they say, "a pitchfork on the water."

Army, officials and roads

Expenditures have increased in almost all law enforcement agencies, except for the Ministry of Internal Affairs. It is proposed to spend at least 5.5% of GDP on the army and defense.

Related: Ukraine's govt approves draft state budget for 2022

As for spending on officials, no one talks about optimizing the management system, except for the liquidation of the so-called "deputy fund". Apparently, this is why the Minister of Finance does not expect a simple passage of the budget. The point is not that "the parliament has become mature," but that the deputies may not like the cut in payments to the majority holders.

One way or another, significant amounts for administration allow us to say that we are again dealing ideologically with the budget of officials and security officials.

They will continue to build roads: 125 billion are allocated for the President's "Big Construction". The government even stressed that the pace of road construction will not slow down. They will also be engaged in the repair of individual districts.

Of course, all these are only approximate figures; certain positions will still be corrected. But they already allow us to understand that the new budget is undeservedly called social: it remains the budget of physiological survival. For the social budget, expenditures are still very modest, only about 35% of GDP. Ukraine cannot afford not to heal its citizens at all, not to teach them, not to defend itself and finish off the infrastructure.

The sad thing is that the government did not want to send money to the development of the economy, which could qualitatively improve the living standards of Ukrainians, albeit at the expense of the budget deficit.

Related: Ukraine govt to increase average salary size to USD 565 in state budget 2022

Great and terrible scarcity

Officials are afraid of the deficit like fire, so the draft budget proposed to reduce it from 5.5% of GDP to 3.5% of GDP. Although, apparently, in reality the deficit will be much greater.

As already mentioned, officials form budget revenues after spending. This means that budget revenues, which they bring in the main economic document of the country, are "a finger to the sky." Moreover, the budget was drawn up without the country's transformation plan promised by President Zelensky.

"I can draw any expenditure side, but in fact everything depends on the lack of income. It is the budget revenues that need to be investigated in the first place," says economic expert Oleg Pendzin.

The draft state budget for 2022 provides for a GDP growth of 3.8%. This is expected: back in June, experts suggested that the estimate would include a rapid economic growth in order to fulfill the president's promises to increase payments to doctors. However, each additional percentage of GDP growth will be much more difficult to come up with. Moreover, Ukraine may again find itself in the "red" quarantine zone. It is curious that at the same time the IMF is very optimistic about Ukraine: it predicts GDP growth of 4.4%.

It is difficult to say whether the GDP growth envisaged in the 2022 budget is justified. But with respect to the rest of the key figures, everything is much more transparent.

Do you believe that the dollar will rise to UAH 28.6-28.7 by the end of the year? It is this figure that is spelled out in the document for 2022. And this is not a peak, but an average value. In fact, officials assume that in some months of next year the dollar will reach UAH 30. Let us remind you that the current budget includes a rate of UAH 29.1. Now the dollar is hovering around the UAH 27 mark.

Related: EU approves humanitarian budget, allocates some of its funds for Ukraine

Inflation of 6.2% is also included in the budget. This year it was set at 8.2%. Now we have more than 10%. According to experts, by the end of this year it will be 12%.

How we can halve inflation this winter is unclear. Moreover, after the increase in wages, it will only grow. In theory, it could be stopped by introducing export duties. But there is little faith that officials will do this.

Understated inflation and an overvalued dollar rate artificially inflate our budget, which in reality will cause the budget to be deeply in deficit. But this state of affairs cannot be called terrible when it is justified by the improvement in the quality of life of Ukrainians.

The growth of government purchases and social payments, with a balanced approach, the economy is able to calmly absorb without serious negative consequences for inflation and the exchange rate. The direction of such a volume of funds in the real sector leads to sustainable economic growth.

Actually, officials have been betting on taxes for several years now. Recently, Prime Minister Shmygal reported that the current budget was fulfilled by 104%. There is a simple explanation for this: the tax authorities have exceeded the revenue schedule. In addition, a number of expenditures for local authorities are blocked today. That is, for the minimum increase in financial benefits, some citizens are paid by others.

The Prime Minister believes that taxes in 2022 should be enough for new expenses, and at the same time, it will be possible to borrow less at the expense of them. Which, apparently, is very important for the government, the borrowing schedule of which the Ministry of Finance completely disrupted.

Related: France opposes NATO budget increase

In November last year, we were, in fact, saved from the failure of unprotected budget items by 600 million euros of macro-financial assistance from the EU. The European Union can provide Ukraine with another 300 million euros, and the IMF - 700 million dollars. But we have been waiting for these funds for a long time, and it is not a fact that we will receive the funds in the near future.

Rough manual intervention in the management of Naftogaz, problems with supervisory boards are unlikely to please the IMF, as well as the very fact of wage growth, due to which the budget deficit is inflated. One way or another, the obligations of Ukraine, which are "loaded" with these funds, are too expensive for Ukraine.

Therefore, officials should rely not on taxes and debts, but on the qualitative growth of income, which is possible solely through the development of the economy. Improving the business environment will lead to higher salaries for Ukrainians, the main feature of the 2022 budget. But, unfortunately, the document cannot boast of anything other than the officials' personal wishes and inflated figures.

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