Budgetary Traditions
As The Day predicted, last Thursday the Ukrainian parliament passed the 2004 national budget in its final second reading mainly thanks to pro-government votes and contrary to the so-called grassroots pressure of the opposition. The government bill was supported by 234 deputies, with 165 voting against and 41 abstaining.
The budget’s revenues and expenditures consist of UAH 60.7 billion and 64.2 billion respectively. The budget deficit is UAH 3.4 billion or 5.3% of expenditures. Compared to the 2003 budget, revenues have increased by 14%, expenditures by 14.9%, and the deficit by 30.2%. While preparing the draft 2004 budget for a second reading, the cabinet increased its revenues by 4.3% and expenditures by 7.7%.
In fact, budget adoption was already a foregone conclusion when the parliament supported the cabinet’s bill on the minimum wage. On November 26, on the eve of the second reading, the president signed this bill into law. Effective from December 1, it provides for a minimum wage of UAH 205 a month. March 1, 2004, will see its resumption of in public-sector remuneration, while the minimum wages will rise to UAH 237 on November 1, 2004, and UAH 262 on January 1, 2005. This finally solved the most acute budget problem which was the main obvious cause of the rift in the parliament.
Yet, analyzing the just-completed budget-adoption process, Prime Minister Viktor Yanukovych came to the conclusion that the root cause of 2004 budget problems lay in the excessive politicization of parliamentary proceedings. “Today’s events in Verkhovna Rada show how strong the breath of the election campaign is even now,” the premier said. “Life has repeatedly taught us that the greatest fault of any government has been ill-considered actions, when economic stability was sacrificed in favor of crowd-pleasing slogans and short-lived advantages, and conditions were created for financial unbalance and inflation,” he said, adding that introducing a minimum wage level that does not correspond to the GDP growth rate “would have upset this country’s whole financial system and economic stability... Unfounded promises entail unfulfilled obligations, but we have no right to be economic adventurists. The government takes only the commitments that it can and does fulfill,” the premier stressed and reminded the audience that real wages had already been gradually raised. This year, public-sector wages saw a 32% rise, and they will go up by another 15% in the first six months of the next year. People’s well-being will be improved by means of cutting the income tax to 13%, as well as increasing social payments and pensions. Mr. Yanukovych said the 2004 budget is Ukraine’s first balanced budget of development. “This balance should never be upset, for it guarantees 100% fulfillment of the budget and rules out any arrears to the people,” he stated.
But is it not also worth thinking today about the facts that have somewhat marred this important victory of the cabinet, which again displayed determination and ability to put its ideas in practice by securing the support of parliamentary majority factions? Did the current “victors” really have to bring coal miners to Kyiv? Is it not the pro-government majority that the miners came out against by striking their helmets on the ground in front of the parliament? Does this show the government’s strength or something else, for example, the extent of its adherence to representative democracy? Also pressing — especially in light of the ongoing political reform — is the question whether the cabinet really had to display via the parliamentary majority contempt for procedural rules when the budget was being debated and passed? It will be recalled that the Budget Code calls for article-by-article, not overall, voting on the draft budget in the second reading, which allows the parliament to amend it. Moreover, putting the blame on existing tradition not only gives our establishment no credit but also sets a quite dangerous precedent. Those who invent such traditions should remember that fate is fickle and tomorrow somebody else could take advantage of them.
