This week, the Ukrainian government submitted a draft budget for 2020. The idea is — it should become a Foundation of the “magic” of the Programme of action of the government. Logically — it had to reflect the key promises of the new government about the world, about the rapid development of economy, fight poverty and so on. That is issued by the new government document, a priori, had to be unique in order to meet these daunting tasks.
The study of the draft budget confirms assumptions about its uniqueness. However, it turned out to be a different nature.
In short, the draft budget practically does not correlate with the government’s agenda. Two documents seem to live separate lives and possibly even in different dimensions. And is extremely unusual. Second, the fact that the draft budget is not aimed at fulfilling campaign promises, it would be impossible to call out of the ordinary (it happens often and in different countries), if not for one thing: the proposed objectives are largely the opposite of these promises.
By the way, a few days before the submission of the draft budget for 2020, 31 October, the Verkhovna Rada adopted changes to the current budget 2019, dealt a tangible blow to the gut of non-oil exporters, which are kind of the Foundation of the future prosperity of Ukraine.
But okay the current budget that the new authorities hands for obvious reasons was linked.
But it is in the budget in 2020 would roam the commitments on all cylinders.
And what is in it?
…Yes, exactly the same as it was in recent years. If not worse.
The growth of revenues of consolidated and state budgets are planned on a much lower level than the growth of nominal GDP. One would assume that the government is going to cut taxes or to introduce some tax incentives for the development of some important industries. On each coin produced in the Ukrainian economy will be less to pay in taxes?
But no. Taxes even increased (for example, excise taxes on tobacco, certain types of rent), and their administration will be tougher (in particular, cash registers become mandatory for single tax payers). No tax benefits are proposed. On this basis, the nominal increase in tax payments can not keep up with nominal economic growth.
But more recently, representatives of the new government and the President Zelensky said about the elimination of the gray schemes on customs and counterfeit supplies of alcohol that exceed the legal, the legalization of gambling and mining and so on. If you imagine that these promises will be implemented, at least partially, the increase in taxes should significantly outpace GDP growth.
How can we explain this contradiction?
Only those that increase taxes and tighten the administrative tools are not for everyone. And to deal with schemes, counterfeiting, etc., no one is going processes rather going to lead.
The costs of the officials and security forces will continue to grow at a faster pace. In General, the spending budget will grow by eight percent. In this case the Ministry of defence — 15%, SBU — 20%, the Ministry of Finance — 25%. The MIA costs will increase by eight percent, but only because they have made a quantum leap in 2019. The subsidy from the state budget to cover the Pension Fund deficit will increase by only three percent — that is half the level of projected inflation (6.4 percent).
In General, the costs of various law enforcement agencies is planned in the amount of 273 billion hryvnia — almost 27% of budget expenditure. Apparently, this is the fulfillment of the promises on the peace agenda and ending the persecution of dissidents.
We should also mention the continuation of the life of a loan. In the budget 2020 provides borrowings on 365 billion. That rather hard to believe given the fact that the budget-2019 are planned for the whole year in the amount of 347 billion, and in fact, over the nine months was 362 billion. The fact that the law is broken, one does not confuse — for such “trifles” Ukrainian statesmen calmly. But to believe that next year borrowings suddenly decline, does not work.
By the way, for repayment and debt service, according to the project, it is planned to allocate UAH 424 billion — 40% of the budget expenditures. But these numbers are very uncertain. After just nine months of the current year on repayment and servicing of already gone 390 billion. Extrapolating, we get to the end of the year of about $ 520 billion. Why this amount should be reduced next year? Is unclear.
That is, in the part of the debt, their repayment and servicing of the project lies an absolute fiction.
But even if it is to believe, it turns out that the security forces and services and repayment of debts released more than two thirds of the expenditure side of the budget. However, one-third live nobody’s going to be taking on new debts.
A living wage is planned to increase only in the second half — to the miserable 2118 hryvnia, five percent from the current level. Will have to wait.
But money is such an overarching entity as:
— the financing of the program “Staple of the country — the project of youth mobility” — 500 million;
— support of cinematography — 760 million;
— the treatment of citizens of Ukraine abroad — 400 million (this, of course, not all citizens, but especially valuable);
— support of TV channel “ATR T” — 50 million (Crimean Tatar channel broadcasting from Kiev, distinguished by the fact that most curse Zelensky during elections);
— financing total Ukrainization under the conditional name “movnye inspectors” — 50 million;
— The Institute of national remembrance — 130 million.
The Institute of national remembrance, remind this Empire of bad memories about the damn Soviet (and before that, Imperial) past. The subject of enhanced care Poroshenko.
In other words, in the main, as it is easy to see, the new government of Ukraine maintains the continuity from previous under the microscope can not be distinguished.
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