The Spring Cleaning Government

Enough time has passed since Petro Poroshenko’s inauguration for it to become clear: Arseniy Yatseniuk will remain at his post of Prime Minister.

“Why depose him? He is in his place!” Stated one of the high officials of the President’s Administration not long before the change of government.

And really, it does seem that Arseniy Yarseniuk is in his rightful place.

The current government cannot be compared to the previous one.

It is working under the conditions, in which Ukraine has lost part of its territory and is in the state of military conflict. This conflict is being heated increasingly by the country’s once-main economical partner – Russia.

The latest “friendly” move of the neighbouring state is the demand that Ukraine pay a huge political price for gas, which has resulted in the shutdown of the pipeline and mutual plaints to the Stockholm court.

Taking into account all the events and the difference in weight categories of the two states, Ukraine will have to face difficulties. When evaluating the work of the government, the influence of external factors cannot be ignored.

They are no longer the ghostly “predecessors,” that Mykola Azarov told fairytales about several years ago. War, criminals in the east and the “help of Russians” are the real reason why economical development is stagnating.

All big companies have suspended their investment programs. Foreigners only come to Ukraine if they have mental issues. The economy “deflates” unless it invests in expansion. Which is what is happening essentially.

International financial organisations have understood this since the very beginning. They allowed for the fall of the Ukrainian GDP in 2014-2015 and this is partially why they are so generous in providing financial aid. They demand even more actively for the government to make real changes in the mechanisms of state government.

For the “backbone” of the economy to have been updated and ready for strong growth on a more transparent basis at the moment when the war is over. In other words, they are demanding Georgia of Ukraine. How to evaluate the government’s work in this light?

On one hand, Yatseniuk’s Cabinet of Ministers has done a great job. Under the conditions when the central government in Ukraine was falling apart rapidly, he managed to gather all the powers back where they belonged.

Yes, this happened not as forcibly and assertively as we would want. Yes, the government by itself turned out to be soft and unprepared for such a situation. The vertical of the President’s Administration, as well as the vertical of the Oblast State Administration heads, especially Igor Kolomoyskiy’s line in Dnipropetrovsk oblast, as well as some other things, helped a great deal.

The Cabinet of Ministers conducted more talks with international investors and established the work of mechanisms which simply have to work.

On the other hand, the government has not yet shown any special achievement. They just work a lot in order to restore order in the economy. However there have been no reforms yet.

This looks like spring cleaning, but this is not renovation, and it is definitely not re-planning or construction. Yatseniuk’s government is the spring cleaning government.

A good example is the functioning of the most corrupt and wealthy Ministry – Ministry of Revenues. With Igor Bilous, Volodymyr Khomenko and Vitaliy Naumenko’s arrival, the tax service and customs have not changed one bit.

The “family vertical” and “state program” disappeared – the cash-in through platforms close to the government with the payment of part of the funds to the budget. However numerous mass cashing centres have emerged. Taxes are still being gathered from companies in advanced, they are being pressured with checks, and they have to agree regarding the return of the VAT in advance.

Later Naumenko was deposed and replaced with the reliable Anatoliy Makarenko. The formal grounds for this could have been the reign of contraband at the customs.

A similar state of affairs is in other spheres of state government. Economical Pravda addressed Prime Minister Arseniy Yatseniuk with questions as to how he evaluates his own work. The head of the government preferred not to answer.

On EP’s petition, experts have analysed the top-10 bills that were passed by the current government. The actions of the Cabinet of Ministers themselves were analysed by senior economist of “CASE Ukraine” Volodymyr Dubrovskiy.

Top-10 bills of Arseniy Yatseniuk’s government

With Arseniy Yatseniuk’s assuming his post as Prime Minister, the Verkhovna Rada has passed ten bills authored by the new government.

1. The law regarding amendments to the 2014 state budget.

The document increased the financing of the so-called Reserve Fund by 6,9 billion UAH. All of this was presented as additional funds for the army. Really, on March 23rd, the Cabinet of Ministers made the decision to give 1,9 billion UAH, on April 17th, another 5 billion were sent to cover the needs of the army.

Additional spendings on the army, million UAH:

Ministry of Defence – 4 588

National Guard – 2 180

State Border Service – 136

Total – 6 904

They are obliged to make a report regarding the usage of all funds until July 15th.

2. Regarding the amendments to the law “Regarding the bases of social protection of homeless persons and unattended children” and “Regarding employment of the population.”

This bill made the life of the refugees coming to Ukraine slightly easier. They were freed from paying for the work certificate in Ukraine.

3. Regarding amendments to the law regarding the state budget 2014.

A scandalous but necessary document which decreased some expenses. Thus, the expenditures of the budget were decreased by 5,5%. Perhaps not too much, taking into account the colossal spendings and corruption during state fund distribution.

All mentions regarding the raising of the life minimum were eliminated from the budget project, consequently, those regarding minimal pensions. In general, the raise proposed by the former government were not too high – just 6,8%. The government decided to say no even to such insignificant increase.

The expenditures on medicine were lowered by 13% – twice as much as the budget average. The program of purchase of ambulance vehicles was completely removed, programs of tuberculosis treatment and that of children with paralysis were cut by half.

Meanwhile the government practically did not touch the expenses from its pocket fund – the budget line “Capital expenses distributed by the government.” In 2013 1,1 billion UAH were spent on these amorphous needs. In 2014 Yatseniuk’s government left these expenses at a much higher level – 2,4 billion UAH.

What capital expenses are more important than the children’s health is unknown.

4. Regarding the prevention of financial catastrophe and creation of grounds for economical growth in Ukraine.

The most scandalous and voluminous bill on over 200 pages, for the examination of which the Cabinet of Ministers gave several hours to the Parliament before voting.

For the most part, the government significantly altered tax legislation, having increased taxes as has been predicted.

The biggest import to the budget – 6-8 billion UAH was brought by the return of the VAT on grain export, which means the implementation of export customs taxes.

The topic of returning VAT on grain export is controversial. The idea of the government was supported by foreign grain traders which do not grow harvest. Those who work on land are against.

First the Cabinet of Ministers proposed not to return the VAT for grain traders for two years, until 2016, but under the pressure from Parliament members this term was decreased to nine months, until October 1st of 2014.

Traditionally, excise taxes were increased: on cigarettes, vodka and wine – by 25%, on beer – by 42%. Why beer has become so unwelcome, the government did not explain. It is known that the vodka producers have been trying to increase the beer excise through the Parliament for a long time to make their product more attractive.

The most problems emerged out of the implementation of the VAT on medicine.

The government hastily made a simple juridical mistake which led to the suspension of import of medicines to Ukraine. The result was a deficit of medicine and huge price increase, which surpassed the devaluation and the infamous 7% VAT.

The pharmacies will probably spend a long time recovering from this mistake, but the prices on medicine will decrease a little in time.

The Cabinet of Ministers also established a universal amount of help upon childbirth – 41 280 UAH. Earlier, for the birth of the first child, 30 960 UAH were given, second – 61 920 UAH, third and more – 123 840 UAH.

The government decreased pensions for former Cabinet of Ministers and Parliament members by 13%, so on average from 15 thousand UAH to 13 thousand. It is not too big of a sacrifice, perhaps, taking into account the fortunes of former MP’s and ministers.

5. Regarding state purchases.

A completely new draft of the law regarding state purchases has been long-expected. Overall since 2008 up until now, 1 377 billion UAH have gone through state purchases!

The new law was passed with a fight with a minimal majority – 226 votes.

The document decreased the list of goods covered by it by four times, allowed activists to be present at tenders and film them, enforced obligations regarding publication of tender results.

Overall, as the Anti-Corruption Centre noted, the new draft of the law may prevent the stealing of 70 billion UAH annually.

6. Regarding amendement to some laws regarding provision of information about state registration of rights and their weight from the State Register of Rights to Immovable Assets. 

The new draft of article 46-1 of the law “Regarding notaries” contains only stylistic changes and restructures the description of the norm of acting legislation. The amendments to article 28 of the law “Regarding state registration of rights on immovable assets and their consequences” explain details.

7. Regarding amendments to the Tax Code and some other legislative acts regarding the elimination of individual contradictions of legislative norms. 

This law corrected the juridical mistake made by the government when implementing the 7% VAT on medicine.

8. Law regarding amendments to the Tax Code.

After the passing of the law, it became more difficult for Ukrainians to buy expensive goods from foreign Internet stores, as packages costing over 150 Euro will have to go through customs (before it was over 300 Euros).

It is unclear how many Ukrainians will be affected by this norm. It is possible that some small machinery and accessories will become more expensive, but this is not too socially significant.

9. Regarding the ratification of the protocol regarding amendments to the agreement between the government of Ukraine and the government of the Republic of Moldova regarding railway transport. 

The act ratified the agreement between Moldova and Ukraine signed on November 12th, 2013. It will simplify the procedures that have to do with railway transportation.

10. Regarding amendments to article 6 of the law “Regarding the status of veterans of war, the guarantees of their social protection” regarding the participants of military action which participated in the anti-terrorist operation. 

The bill grants the status of participants of military action to legal law enforcement formations which “protected the sovereignty and territorial integrity of Ukraine and participated in the anti-terrorist operation.

The people that are protecting the country from terrorists will receive the following subsidies: 75% discount on utility services, free city public transportation, free medicine, the right to additional holidays, the right to receive accommodation in case of injury, annual bonus from the government.

We have to hope that the government will comply with all obligations taken up before the protectors of the motherland.

Source: Epravda

Translated by Mariya Shcherbinina

One thought on “The Spring Cleaning Government

  1. Pingback: The Spring Cleaning Government - Israel Foreign Affairs News

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