In announcing the country’s budget for 2016, Ukrainian Prime Minister Arseniy Yatsenyuk on Dec. 17 offered the cautionary disclaimer that there has never been and never will be a perfect budget – but he hopes the budget for 2016 will at least be effective and fair.
“It will
be, if the Verkhovna Rada decides today to hear the draft budget designed by
the government and the draft budget will be completed
in cooperation with the lawmakers by next Thursday, as well as the draft laws
that are necessary for the budget,” Yatsenyuk said from the parliament’s
podium.
According
to Ukrainian Finance Minister Natalie Jaresko, whose presentation followed
Yatsenyuk’s speech, “the draft budget meets the main challenges and needs of
the state, nation and business.”
The key
priorities of the budget for 2016, she said, were to keep Ukraine’s army in a
state of combat readiness, restructure the public debt, speed up the tax reform
that would define the income part of the budget, and meet society’s need for
protection.
Jaresko promised
that the real GDP would increase by two percent in 2016, while inflation would
be 12 percent.
The budget
revenue and expenditures will increase by 16 percent compared to the budget for
2015, to $24.94 billion and $27.97, respectively.
The budget deficit
will fall from 4.1 percent of the GDP this year to 3.7 percent in 2016.
“The
revenue part will be based on the new tax legislation that includes key
elements – leveling of the tax field, fairness and transparency, withdrawal of
the tax privileges and exemptions, legalization of gambling and amber mining,”
Jaresko said. She added that the government wanted to introduce a tax fee for lush
apartments and cars, and also increase the excise tax on beer, alcohol and
tobacco.
The minister
also vowed that there would be no exaggerated expenses.
The government
plans to increase utility subsidies, defense expenses, and to increase the
minimum wage by 12 percent to $64, considering the planned exchange rate,
according to Jaresko.
She
insisted that in order to keep the budget balanced, it needs to be adopted in a
package with another six laws, including the new tax legislation.
The government’s
presentation was not warmly welcomed in parliament, however.
Viktor
Pynzenyk from President Petro Poroshenko’s Bloc said that people who live off
of minimum wage suffer the most from the budget’s deficit and inflation. In his words, the minimum wage has
not changed in years, and even the increase that the government is now
promising is not much of an increase.
“You can’t
tighten belts forever,” he said.
Yulia
Tymoshenko of the Fatherland party said that the discussion was irrelevant.
“Did anyone
notice that we are considering the budget based on tax legislation that does
not exist? They did not register the tax draft laws. The government is acting
against the constitution,” she said. “GDP is a crucial number for each country.
Ukraine’s GDP fell two-fold during the last two years. People involved in
agriculture make up the country’s GDP and now they may lose their tax relief. This budget is a verdict for the
state. Farewell budget. Either we say goodbye to the government, or to the
country.”
Kyiv Post staff writer Olena Goncharova
contributed to this report.
