11:22 15.11.2017

Rada passes at first reading 2018 draft national budget

5 min read
Rada passes at first reading 2018 draft national budget

Ukraine's Verkhovna Rada on Tuesday approved resolution No. 7000-p on conclusions and remarks to the bill on the national budget of Ukraine for 2018, which means that the parliament passed the document at first reading.

An Interfax-Ukraine correspondent has reported that 260 lawmakers backed the document.

In addition, the parliament approved at first reading two other bills from the so-called "budget package": amending the Budget Code (No. 7116) and amending the Tax Code to ensure balance of budget payments in 2018 (No. 6776-d).

A total of 251 and 260 lawmakers respectively approved the documents.

According to the Budget Code and the Verkhovna Rada's rules of procedure, the draft state budget should be considered at first reading before October 20. After that, the Cabinet of Ministers, with the participation of the parliamentary budget committee, should submit to the Rada the updated draft within 14 days, but not later than November 3, taking into account its budget conclusions with a comparative table explaining the refusal to include certain parliamentary proposals.

The consideration of the draft state budget for 2018 at second reading should be completed before November 20 and at third reading and as a whole by December 1.

At the same time, Prime Minister Volodymyr Groysman noted that the government and deputies would have time to finalize the budget, taking into account the approved conclusions.

During the consideration of the budget package, Finance Minister Oleksandr Danyliuk said that proposals from the Association of Cities had been taken into account and that the main contentious issues on financial decentralization had been removed. In particular, according to him, the financing of a number of benefits from the state budget and the possibility of obtaining medium-term loans for UAH 8.47 billion have been preserved, and internally displaced persons were included in subsidies to local budgets.

A budget committee representative added that an agreement was reached to preserve in 2018 an experiment on the transfer of extra-budgetary customs payments for the development of roads in the regions, however, at the suggestion of MP Yaroslav Dubnevych, with some corrections.

At the same time, opposition representatives, particularly the Samopomich faction, again criticized such amendments to the Budget Code, stating that they are transferring unsecured financial liabilities to local budgets from the central budget and also introducing manual distribution of subventions.

As for the amendments to the Tax Code, the provisions on the indexation of excise taxes on alcohol and rent for radio frequency resources, as well as on the transition to the euro in setting excise taxes on tobacco, were excluded from government proposals.

The parliament's budgetary conclusions, which MPs discussed on October 19, in particular, contain proposals to increase the amount of allocations of the National Bank of Ukraine by 3.6%, or UAH 1.73 billion, to UAH 49.55 billion, and also to work out the issue of the NBU paying interest to the state budget for using the remainder of funds on the single treasury account.

Other initiatives include the possibility of allocating in 2018 of state guarantees worth UAH 2 billion for PJSC Export Credit Agency of Ukraine. In addition, deputies say that local budgets could be banned from placing their funds in commercial banks, limiting the possibility of their placement only by the State Treasury Service or government securities.

Another innovation is the possible writing off from Kyiv of up to UAH 3.56 billion in obligations to the state if the city spends such a sum on the construction of subway from the Syrets station to Vynohradar.

In addition, when preparing the draft state budget for second reading, it was proposed to increase spending on a number of budget programs by about UAH 2 billion. In particular, UAH 340 million is to be allocated to the budget program for financing higher educational institutions of the 3rd and 4th level of accreditation, UAH 162.7 million for the program to create national films and support the Dovzhenko National Center, UAH 80 million for financing medical institutions, and UAH 60 million for maintenance and support of the activities of the Verkhovna Rada.

According to the text of the document, the deputies suggest that the government raise the living wage and the minimum wage, based on the opportunities and predicted economic growth.

The Verkhovna Rada sees the possibility of increasing the expenditure side of the draft budget by increasing taxes and fees on personal income, rental payments for the use of subsoil for gas production, and by increasing the share of net profit (income) of state enterprises that is sent to the budget. In particular, the issue concerns the respective part of the net profit of Naftogaz Ukrainy.

The document also envisages an additional UAH 5 billion for subventions from the state budget to local budgets for the socio-economic development of individual territories by reducing the State Fund for Regional Development by this amount.

According to the government draft of the state budget for 2018, its revenues are to be increased by 13.8% compared to the planned revenues of the state budget for 2017, to UAH 877.4 billion, including by 15.7% in the general fund, to UAH 811.66 billion. Expenditures are to be increased by 12.7%, to UAH 948.13 billion, including by 14.4% in the general fund, to UAH 878.48 billion. The budget deficit grows by just 0.4%, to UAH 77.95 billion.

The government built the draft budget for 2018 on the forecast of real GDP growth at 3% and inflation of 8.1%.


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