Ukraine's total stocktake: Key numbers of Zelensky's state audit

Author : Anna Peshkova

Source : 112 Ukraine

Officials reported on the "lost" trillion dollars and the enormous opportunities for our country
13:15, 9 November 2020

Almost immediately after Volodymyr Zelensky took over as president, his team promised to conduct a "state audit" during the first 100 days. As a result, 539 days have passed since this promise has been fulfilled.

Against the background of a huge screen, as if symbolizing the digitalization of the Ze-team, officials reported on the "lost" trillion dollars and the enormous opportunities of our country. Despite all the pomp of this event and the solemnity of the voiceover announcing the speakers, the event itself turned out to be one of the main disappointments of the year.

Such speeches from the president's team once again prove that they do not carry any meaning or direct consequences for Ukrainians. Except, perhaps, spending millions of hryvnias on renting a hall and creating a beautiful presentation with spectacular videos.

Expectations from the state audit

An audit involves monitoring the effectiveness of the use of funds. This is a common thing for businesses of public interest, public joint-stock companies. The country is, in fact, also a large enterprise, the efficiency of which is fundamentally important for millions of people. "Corporate" fraud in this case can reach hundreds of millions of dollars. Therefore, of course, the presentation from the Cabinet of Ministers was highly anticipated.

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Perhaps the most anticipated was the audit of the "coronavirus" fund (which, as it turned out, had been considered a "road fund" all this time). Even the most cursory analysis back in April showed that ventilators were purchased at inflated prices. The Cabinet of Ministers really ordered an audit of this fund. However, as a result, we will receive scandalous data after the presentation.

We would also like to hear from the officials how effective the work of the National Anti-Corruption Bureau (NABU) was. Now, in the short term, we are unlikely to find it out. Due to the recognition of the president's powers under the law "On NABU" as unconstitutional, the implementation of an independent audit of the institute is likely to be outside the legal framework.

When the law on pension reform came into force in October 2017, it also stated the obligation to audit the Pension Fund of Ukraine (PFU) within six months. However, this was never done. Representatives of PFUs systematically complain about the gigantic shortage of funds that have to be covered from the state budget. But some financial experts are confident that, in fact, substantial reserves can be found in the department. This information would be extremely relevant against the background of a veiled increase in the retirement age in the form of increased requirements for seniority.

The same can be said about inspections in ministries and state-owned enterprises, since the data that have already been obtained from a number of departments, without exaggeration, are shocking. An audit at Naftogaz, for example, recently showed that the company not only did not earn anything over the past year but also turned out to be in deficit for 2,67 billion USD.

There were also some expectations regarding the comments of officials on the already recorded abuses. So, for 9 months of 2020, the State Financial Monitoring Service discovered money laundering operations for 2,14 billion USD. Also, head of State land cadaster Roman Leshchenko said that during state independence 5 million hectares of land had been illegally privatized, and promised to show the "grid" of the existing "latifundia." However, for some reason, the scandalous data has not yet been published.

In addition, we wanted to hear who are these "mice" who ate all the supplies of Ukrainian food. An audit at the State Agency of the Reserve of Ukraine again showed the disappearance of 28,000 tons of grain, financial fraud, delays in food by hundreds of millions due to the negligence of officials. But audit in itself is not a solution to a problem: it should lead to a specific result. And if not to the return of lost funds, then at least to responsibility for the beneficiaries of the schemes.

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However, none of this figured in the presentation. Judging by what the representatives of the Ze-team were talking about in the end, the officials chose not quite the right word to describe the monitoring of the processes in the Ukrainian economy. It was not about the funds used by ministries, state-owned enterprises, but about the country's resources. The return of the withdrawn funds and the landing were not the goals of the audit in itself. If incriminating data were presented publicly at a pompous presentation, it would hardly have been possible to earn additional PR points on it.

So, in fact, it wasn’t an audit, but an inventory.

Zelensky’s audit

“In order to make any transformations, we must know the human resource, financial resource and time resource,” first deputy chairman of the Verkhovna Rada Ruslan Stefanchuk said more than a year ago.

First of all, officials analyzed the human resource. Ex-Minister of the Cabinet of Ministers Dmytro Dubilet conducted a "population census." Calculations have shown that there are 32 million citizens in Ukraine, but sociologists advise against trusting this information. They criticized the system by which the recount was carried out.

On a thorough census, which had not been carried out for more than 10 years, they decided to save money, because otherwise, it would have been necessary to open special centers for the accumulation of information and train about 100 thousand census takers, purchase equipment and tablets. Such "pleasure" should have cost the state, according to various estimates, from 70 to 140 million USD, but instead, almost a billion was allocated for "population monitoring." Experts said that the census could also be unprofitable for officials because the publication of its results was supposed to provoke a reduction in the number of MPs, as well as to stop manipulations with "dead souls."

The "inventory" of the state is a really important issue. Unless, of course, it is going to be held with the aim of holding a large-scale sale. Reporting on the presence of forests in Ukraine and the underdevelopment of furniture production suggests that all the resources that the country possesses, the president's team is going to pump out, cut down, and dry out. And if the Ze-team did not have such plans, then the compilers of the presentation hardly earned an award.

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PM: Ukraine lost $ 1 trillion in just 10 years

The reliability of this amount is a huge question. For some reason, the country lost exactly a trillion, and not, for example, $ 999 million. In addition, it is not too hard to believe that officials found millions of hryvnias during the coronavirus pandemic for an in-depth audit of three decades of the Ukrainian economy. Nothing is known about the methodology of calculus, as well as about whether they turned to the State Statistics Service, to academic institutions, for which audit is specialized work. Nevertheless, the President of Ukraine is confident that the results are "not just numbers, slides, and videos."

In fact, the word "loss" in the context of this audit is not entirely correct to use. Rather, it is about untapped potential. So, with the help of a few numbers, the Ukrainians were again clearly shown: the activities of the "leaders" were ineffective, but everything can change when a worthy team comes to the "helm."

The investment figures announced by the Cabinet of Ministers are even more confusing. Officials have calculated that Ukraine needs 63 billion in financial injections. Where this amount was taken from is also unclear. Is it possible to name any specific figure at all when it comes to such a vague item of income?

Related: Up to 20,000 people could die in Ukraine by end of year due to Covid-19, - Kyiv School of Economics

The future of these numbers next

Officials plan to use the data "profitably." Zelensky said that based on the audit, a National Economic Strategy until 2030 will be developed. The Strategy 2020, adopted five years ago, speaks volumes about whether it is worth waiting for something from this program. By the way, there was no audit of its implementation.

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The strategy involved 62 reforms, including medical, tax, anti-corruption, judicial, law enforcement reform, decentralization, public administration reform, and deregulation. Some of them were not even implemented, and those that were launched were carried out with a dubious effect.

It was planned that Ukraine will take a place among the first 30 positions in the World Bank's Doing Business rating. In fact, the country was ranked 64th. The gross domestic product per capita was supposed to rise to $ 16,000 but amounted to $ 13,000.

According to the Corruption Perceptions Index, which is calculated by Transparency International, Ukraine should have entered the 50 best countries in the world. As a result, last year the country ranked 126th place out of 180. So we found ourselves approximately on the same level with Kyrgyzstan, Azerbaijan, and Djibouti.

Also, the authors of the Strategy planned a kind of social contract between the government, business, and civil society, where each party has its own area of ​​responsibility. But responsibility on the part of the state manifested itself only in the form of a tightening tax stranglehold and supposedly breakthrough loans at 5-7-9%.

The only thing the authorities have succeeded in is that spending on national security and defense exceeded 3% of GDP. Zelensky is proud that he "surpassed" Poroshenko's bar and signed a decree recommending to allocate almost 6% of GDP for defense next year.

However, there is no need to go far to analyze the chances of implementing the new Strategy. The current government did not even adopt the government's action plan for the current year: the budget was written without this fundamental document. Also on September 9, the Cabinet of Ministers approved a plan of its priorities of 690 steps until the end of the year.

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Officials from the current government, most likely, will not be seen in the framework of the Cabinet of Ministers-2030, so they will not have to answer for their promises. But Zelensky believes this could fix the creation of the Economic Constitution. In this case, with the change of government, in his opinion, the country's economic course will not change.

The government's wishes should have been shown in documents, the implementation of which officials can still control. For example, in the draft budget for 2021. Even a superficial analysis of this document gives an understanding that nothing has changed significantly in it in comparison with 2018-2019. Social payments were still below the subsistence level, and debts continue to grow. Even the March promise of 500,000 jobs has failed. With this approach, there is hardly anything to expect from 2030.

So, before trying to understand "what has been done wrong in managing the Ukrainian economy over the years," the president's team should first look for a speck in its own eye.

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