State aid in Ukraine is ineffective and non-transparent
Ukraine lost billions of US dollars owing to the ineffective state aid. This statement was discussed at the Expert Toloka “How to make state aid be helpful?” held on April 3 in Kyiv. It was organized by the Civic Expert Council and the Institute for Economic Research and Policy Consulting with the support of the European Program of the International Renaissance Foundation.
“The experts community lacks critical understanding of the state aid today. It is often confused with the concept of social support. State aid is an estimative category and it should be assessed eligibly on a case-by-case basis. The main element of the state aid is not about control, but about monitoring system and regulating the information about where the aid is given as well as its volume. However, control system is a final element of the whole aid management system. It is focused not on financial policy, but on competition”, Valentin Dereviankin, deputy head of the EU project “Harmonisation of Competition and Public Procurement Systems in Ukraine with EU Standards”, explained.
According to experts, the lack of clear transparent principles in providing state aid distorts competition. This, in turn, creates a poor investment climate.
The rules for providing state aid are neither clear nor transparent in Ukraine, experts said. There is no legislation that would establish the conditions for approving such aid in transparent way. There are no agencies that would be responsible for inventorying and control of the provision of such aid. There are no special reports on the state aid apart from budgetary reports – in contrary to the principles of transparent public financing.
“There is an urgent need to regulate the current expenditures and allocate state aid efficiently, directing it according to the needs, but not to the interests of certain enterprises or regions. With this end a separate competition agency should be established to control the aid provision, to assess its impact on competition and to monitor all the impact factors adequately. The Antimonopoly Committee could become such an authority responsible for controlling the adherence to the rights of various enterprises and market competition”, Liudmila Liashenko, head of the department of the Antimonopoly Committee of Ukraine, commented.
Other experts believe that the Ministry of Finance of Ukraine can become such institution, as it is the main state authority that approves decisions on state aid provision. It defines the volume of state aid included into the state budget draft and analyses the budgetary impact of all the legislative initiatives submitted by the Cabinet of Ministers and most of those submitted by the Parliament. However, there is no single rule in establishing such institution in the EU states, so it depends on a specific case. It might be one institution or even more, depending on the level of state economy.
Experts remind Ukraine committed to approve the regulations for the state aid. It is one of the priorities of the EU Association Agenda in the sphere of competitiveness. Although the framework law on state aid provision has not been approved yet, despite several versions of the law project have already been drafted. Lack of political will and disagreement in the Government about the regulation principles are the main reasons for the delay in approving this law.
Civic Expert Council
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youkraine.eu@gmail.com
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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.
