The Cabinet vowed Friday July 3 to pay off all back wages by November 1, provided the government could secure sufficient foreign loans and financial assistance.
I am sure that if the Cabinet receives all the foreign loans it expects to, all back wages will be paid off, said Finance Minister Ihor Mitiukov, delivering a report on wage arrears to Parliament. Current budget revenues are sufficient to pay current wages, but insufficient to pay off back wages.
In an indication that the Cabinet is angling for credit from sources other than the International Monetary Fund, Mitiukov said negotiations are underway with a number of foreign lenders that could extend the necessary funds without setting steep preliminary conditions. Now that the 1997 budget has been approved, we can borrow money at lower interest rates, and be independent of international financial institutions, he said.
By most accounts, Ukraine and the IMF have not seen eye-to-eye in long-running negotiations for a three-year $2.5 billion loan. President Leonid Kuchma openly criticized the IMF two weeks ago, saying the Funds delay of the loan put it on the same side of the barricades as forces bent on driving Ukraine back to Soviet-era conditions.
The back wages crisis is at the center of the macroeconomic mess that the IMF has insisted Ukraine put in order. According to Mitiukov, employees of state enterprises were owed Hr 3.5 billion ($1.9 billion) in back wages as of June 1, or Hr 1.1 billion more than at the beginning of 1997. Employees at state-financed organizations were owed Hr 1.75 billion ($950 million) in back wages as of the same date, or Hr 154 million more than at the beginning of the year. The states debt to pensioners stood at Hr 1.47 billion ($800 million) on June 1, up Hr 347 million from Jan. 1.
Mitiukov said the bleak statistics contained a silver lining: Although wage arrears have been growing steadily since the beginning of the year, the rate of growth has slowed since April.
This was cold comfort to deputies.
The wage arrears problem is a destabilizing factor for the country, said Volodymyr Yavorivskiy of the Constitutional Center faction. But the only thing weve done so far to address it has been to certify that the problem is a reality.
Weve been watching the Cabinets back wage payment policy repeatedly run through three cycles, said Serhiy Hmyria of the Communist faction. First they say there is no money available, so back wages cannot be paid. Then they say that although money remains unavailable, there are positive trends emerging for quick payment of all debts. Finally they complain that the positive trends have somehow come to nothing.
Acting Prime Minister Vasyl Durdynets sought to assure lawmakers that the government would stick to its promises. He said the Cabinet is working on a number of draft laws, under which the property of enterprises that owe workers back wages could be auctioned off, and wage-owing enterprises could not raise salary levels until paying off all back wages.
A separate set of Cabinet measures would impose stricter control over the back wage payment process, not least by enhancing the oversight role of government prosecutors. Control is going to be strict in all directions, said Durdynets.
