UARU
$11 Million “Biocluster”, “Poorer” Interior Ministry, Ze-Uni: Ukraine’s New Budget, Explained
17 September, 2021
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Photo: UNIAN / Oleksandr Kuzmin
The Cabinet of Ministers has submitted to the parliament a draft state budget for 2022. And although the Verkhovna Rada has not yet supported it, and the final figures will definitely change, Pavel Kalashnik already found some interesting articles that the state wants to finance worth millions or even billions of hryvnias.

Borrow to repay

Compared to last year's budget, the government wants to increase expenditures by almost 100 billion ($3.743 billion) to 1.441 trillion hryvnias ($53.941 billion).

The state will have to spend a lot of money on debts next year. 393 billion ($14.7 billion) will have to be repaid, and another 181 billion ($6.8 billion) will be spent on debt servicing.

But these 393 billion are not included in the budget expenditures, they will simply be borrowed again.

Mirage of a pension

200 billion hryvnias ($7.5 billion) will be allocated from the state budget to the Pension Fund.  The total budget of the fund is 532 billion ($19.9 billion). That means the fund's own revenues, primarily the SSC (Single Social Contribution), are catastrophically insufficient to meet its obligations. And this is given the small, to say the very least, pension of Ukrainians.

As Finance Minister Serhiy Marchenko recently said, 40-year-olds should no longer count on a state pension. He explained that this was due to an aging population. And the ex-minister of economy Timofiy Milovanov advised to lay aside 3-5% of the income and not to count on a state pension.

No Avakov, no money

Most law enforcement agencies should receive more funding than this year. The sole exception is the Ministry of Internal Affairs, which will receive 69 million ($2.583 million) less. This is a symbolic decrease of 0.07%, as the total budget of the department is over 98 billion ($3.668 billion). However, it is very noticeable that the budget of the Interior Ministry only ever used to increase from year to year, and as soon as Arsen Avakov leaves, it shrinks.

The security service will receive one billion ($37.4 million) more in funding compared to last year - a total of 16 billion ($599 million). Incidentally, the SBU reform is still underway, but can’t be completed, even though the law was passed in the first reading.

Last year, more than half a billion ($18.7 million) was meant to be allocated from the budget for the establishment of the Bureau of Economic Security. The agency has not yet started working, but it should be created by the end of the year, so in 2022 the authorities intend to spend even more on it - 621.6 million ($23.3 million). But if we recall who will head this agency (Vadym Melnyk, current chief of State Fiscal Service), there is little doubt about its prospects.

Ze-roads, Ze-uni and Ze-planes

Ukravtodor, the state road agency was spared the fate of the Interior Ministry because the president is enthusiastic about building roads in the country. By 2022, the agency may receive 79 billion hryvnias ($2.957 billion), which is 10 billion ($374 million) more than last year.

It is worth clarifying that not all this money will go to the roads. Among other things, almost 16 billion ($599 million) of them are debt payments.

Also this year, Volodymyr Zelenskyy announced the creation of a presidential university and even signed a relevant decree. According to the Ministry of Education, such a university will set the state back 7.2 billion hryvnias ($270 million). However, the budget has only set aside 100 million ($3.7 million) for the "presidential university" project so far.

The government promises to complete the establishment of the university in 2023. Zelenskyy wants his teachers to receive a salary of 4,000 dollars or euros, but in that case, 100 million from the budget is unlikely to suffice.

READ MORE: New Cabinet, Old Problems: The Economy Inherited by Shmyhal’s Government

A state airline is another "dream" of the president. However, the draft budget does not mention this. It is possible that the Ministry of Infrastructure will spend money on it, but the expenditures on this department have been significantly reduced - 8 billion  ($299.5 million) in the previous budget compared to 5.5 billion ($206 million) in the current one.

Water vs internet and subway hopes

While Kyiv residents are waiting for the metro to the left-bank residential district of Troieshchyna, the Cabinet plans to allocate 313 million ($11.7 million) from the budget for the extension of the third metro line in Kharkiv, and 1.24 billion ($46.4 million) for the completion of the construction of the metro in Dnipro.

However, it should be noted that such expenditures rarely survive the cut. So it's too early for the residents of Kharkiv and Dnipro to rejoice just yet.

But Mykolayiv residents can count themselves lucky in another respect: the budget will allocate more than 30 million hryvnias ($1.1 million) for the development of the water supply system and sewerage in the southern Ukrainian city.

In the draft budget, 45 million ($1.7 million) was set aside for water supply to villages, while "the implementation of measures to increase the availability of broadband Internet in rural areas" got 500 million ($18.7 million). According to the government, the problem with Internet availability in rural areas is 10 times worse than with water.

This time, the public broadcaster seems to be getting less money from the state. In the 2021 budget UA:PBC had 2.27 billion ($85 million) at its disposal, next year - only 1.87 billion ($70 million).

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Beware of civil servants, census, Antarctica

Authorities recently announced a nationwide census. And although it is planned for 2023, some funds are included in the 2022 budget - 400 million ($15 million) for "information technology support".

Oddly enough, the government provides for compensation for victims of state employees in the budget in advance. It concerns harm to citizens from actions or inaction of law enforcers or other officials. 150 million ($5.6 million) is allotted for this.

The state agency that manages the exclusion zone can receive 10 million ($0.4 million) to "preserve the ethnocultural heritage of the regions affected by the Chornobyl disaster."

The Cabinet also wants to allocate almost 331 million hryvnias ($12.4 million) from the budget for the operation of the Antarctic station "Academician Vernadsky".

Insulation and a “biocluster” (whatever it may be)

As for vaccination, the authorities seem to believe that everything is going well, so the funds set aside for this process have not changed and remain at 2.6 billion hryvnias ($97 million).

READ MORE: Ukraine’s 2020 Budget Is Changing Due to the Coronavirus

A new article appeared in last year's budget - the creation of a “biocluster”, which, among other things, should develop vaccines. It is not yet clear what a biocluster is, although Health Minister Viktor Lyashko tried to explain it to us. But in any case, it’s a fancy word, and there’s no problem allocating a tidy sum for it. A year ago, 100 million ($3.7 million) were allotted, in the current draft - already 300 million ($11.2 million), so the biocluster is drawing nearer.

At the same time, the government wants to increase the salaries of doctors: the minimum salary of a doctor should reach 20,000 ($749), the average salary - 22,500 ($842), the minimum salary of paramedics - 13,500 ($505), the average - 14,500 ($543). In general, spending on the Ministry of Health should increase from 169.2 billion ($6.3 billion) to 193.6 billion ($7.2 billion).

Last year, we pointed out the following expenditure item: "State support for measures aimed at reducing greenhouse gas emissions, in particular the insulation of social security facilities, the development of international cooperation on climate change."  For 2021, one million hryvnias ($37,433) were allocated for it.

The new draft budget has the same amount. Hopefully, this will genuinely help us combat global warming, and it’s not a mere leftover from last year's document.

At the same time, 2.594 billion ($97 million) is reserved for the operation of the Energy Efficiency Fund, which only got 100 million ($3.7 million) last year. This fund implements the program "Enerhodim", which helps improve insulation in high-rise buildings.

Unfamiliar faces

Energy Efficiency Fund is not the only “stranger” in the document, here are a few more institutions that hardly any people know about.

Not so long ago, gambling was legalized in Ukraine, which should bring money to the budget.  At the same time, the Commission for Regulation of Gambling and Lotteries has appeared - the government wants to allocate almost 116 million ($4.3 million) to it.

Ukraine also apparently has a National Mediation and Conciliation Service.  In 2022, it should receive more than 40 million hryvnias ($1.5 million) for "assistance in the settlement of collective labor disputes (conflicts)."

READ MORE: Budget, Gas, and Corruption Whistleblowers: What’s Changed for Ukraine in 2020?

There is also the State Service for Ethnopolitics and Freedom of Conscience (to receive almost 17.3 million ($0.65 million)), the High Court of Intellectual Property (17.98 million ($0.67 million)), the National Agency for Civil Service (251 million ($9.4 million)). The latter will spend 125.9 million ($4.7 million) "on professional training of civil servants and local government officials."