The approval of the country’s main financial document was delayed until the very last minute on the hope that would be convinced Russia to reduce natural gas prices, which considerably impacts Ukraine’s national budget. Only after Russia announced that it wasn’t going to happen did the officials on Hrushevskiy St. give up, allowing US $416 per 1,000 m3 for gas to be worked into the budget.
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| PHÎÒÎ: PHL |
The results are unlikely to make Ukrainians happy. Even Premier Mykola Azarov called the budget “tough”, admitting that citizens will have to tighten their belts this year. For example, the minimum monthly wage will grow in 2012 by a mere UAH 61, or 5.7%, which is below the projected inflation rate. Problems may once again arise for those who now enjoy subsidies and benefits, because the law entails a much smaller amount of budget money for this purpose. The financing of the main line items in the budget will be reduced to a minimum. For example, the State Road Construction Agency (the former UkrAvtoDor) will suffer, because while the allocations from the budget are a still impressive UAH 9.4 bn, over half of this amount will go to repay loans.
The articles on fighting HIV/AIDS, which is a very serious health threat in Ukraine, fare much worse. The dedicated service that manages the programs combating these diseases was allocated only UAH 3 mn for the entire year. With such a puny amount the best that this service can hope to accomplish is to pay the salaries of its employees.
At the same time, there is sufficient funding for EURO 2012 – the government found UAH 7.3 bn for the National Agency for Holding the Championship, even though tens of billions have already been spent over the past several years.
Other line items also raise eyebrows. Huge amounts of cash have once again been allocated to subsidize state-run companies, which can be classified as humanitarian assistance for Ukraine’s oligarchs.
Yet another curiosity is the one billion in support to be given over to the hops-growing and viniculture industries, neither of which is suffering economically. Market players have stated that this unexpected subsidy stemmed more from the efforts of a well-connected lobby group than any dire necessity of the respective industries.
There are many features in the new budget that suggested a deficit of funds; a closer inspection would reveal that there is in fact plenty to go around for all sectors. The big question is whether somebody has already laid their hands on it.
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