2009-01-07

On 26 December, the Ukrainian parliament adopted the 2009 budget by the smallest possible majority of votes (226), and on 29 December, the budget bill was signed by the president. According to most experts and many politicians, the budget is unrealistic because it is based on incorrect macroeconomic assumptions, while the revenue and spending structure envisaged in the bill proves that the government has no coherent plan for an anti-crisis action.

The speaker of parliament Volodymyr Lytvyn held three votes on the budget bill, which was finally adopted by the required majority thanks to four deputies from the opposition Party of Regions, two of whom later declared that they had not taken part in the vote. The budget bill envisages GDP growth in 2009 of 0.4%, inflation of 9.5%, and an average exchange rate of 7.5 hryvnia to the US dollar. The projected budget revenue in 2009 is 237.5 billion hryvnia (higher by 10%), while the budget spending is 265.6 billion hryvnia, the budget deficit thus being -2.96% of GDP.

In the conditions of the economic crisis, which will continue to worsen in Ukraine, both the macroeconomic assumptions and the budget revenue projections are unrealistic. The fact that the traditional structure of budget spending has been preserved suggests that the government has developed no plan for any anti-crisis measures.

Probably, the primary objective was to adopt a budget based on the assumption that it would be subsequently corrected on an ongoing basis. The fact that the final consultations on the draft were conducted by deputy PM Oleksandr Turchynov, without the participation of the finance minister, may suggest that this was indeed the case. <AnG>

Permalink