Experts Denys Chernikov and Ivan Sikora have analysed the State Budget for 2014
The systemic risks contained in the State Budget for 2014 could result in UAH 188 billion in losses, budget experts Denys Chernikov (Legislative Initiatives Laboratory) and Ivan Sikora (Open Society Foundation) said during a press conference on January 15. The analysis was done with support of the International Renaissance Foundation’s European Program.
The experts said losses from excessive and inefficient state aid to business, non-transparent and non-competitive public procurement, problems with VAT administration, along with other corrupt risks will exceed UAH 188 billion – nearly half of budget expenditures. Improper administration of personal income tax and the land tax, which provides the bulk of revenue for local budgets, and less significant schemes for “laundering” money from the budget bring the losses to over UAH 200 billion.
The experts stressed that despite the country being on the brink of default, the government continues to inefficiently finance enterprises and entire industries, wasting budget funds and unreasonably increasing expectations of employees of enterprises receiving state aid.
Denys Chernikov, program manager at Legislative Initiatives Laboratory, said the SME microcredit program was given only UAH 11.2 million – nearly 20 times less than stipulated in the government economic stimulus program for 2013-2014, and more than 1000 less than financing of the coal industry. This, despite the fact that small and medium businesses provide at least one-fifth of total revenue of the consolidated budget of Ukraine.
In his turn, Ivan Sikora, director of Open Society Foundation, added: “You can talk about more than UAH 100 billion (US$12.5 billion) in losses from public procurement, if you factor in the 30% kickbacks and official assessments by senior officials regarding budget losses due to corrupt risks in procurements made in 2011 –nearly one-quarter of the expenditure side of the budget.”
Ivan Sikora and Denys Chernikov offered suggestions for improving the budget policy efficiency. They support targeted management of public finances and the introduction of international standards in state business aid and public procurement. They also say it is important to refocus budget policy on real support of small and medium business.
On January 16 the Verkhovna Rada adopted the budget for 2014.
Contacts:
Legislative Initiatives Laboratory
Denys Chernikov
Chernikov@laboratory.kiev.ua
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The essential role of the European Program lies in promotion of Ukraine’s European integration, combining external pressure of the EU with the domestic one of the Ukrainian civil society, and thus contributing to promotion of open society values in Ukraine.
