Experts of the ISES have expressed their propositions to the General Directions of Budget Policy

On May 17th
during the briefing in the Ukrainian crisis media-center on theme: “The Budget Policy: Pragmatic approaches to the strategic decisions”, experts of the Institute for Social & Economic Studies expressed their vision of budget process and propositions to the General Direction of Budget Policy.

Opening the briefing, Board Member of the Institute for Social & Economic Studies Anatolii Maksiuta noted that the Government having declared reform of the budget policy is delaying with presentation to the Verkhovna Rada of Ukraine of incredibly important document – the draft of the General Directions of Budget Policy for 2017.

“The General Directions of Budget Policy (or budget resolutions, or budget declarations) exist in many countries, which are aimed even on the middle- and long-term perspective. That’s why we want to catch the society’s attention to this important document so Ukraine’s state budget could became a truly efficient tool of reforms and the General Directions of Budget Policy will be understandable for everyone and provide clearance, anticorruption and responsibility of power”, – Anatolii Maksiuta stated.

During the briefing, the expert on financial policy of the Institute for Social & Economic Studies Antonina Deshko named the main defects of current budget policy. Among them she named dependence from the political and economic conjuncture, because the law on the state budget submitted and approved with chronic delays and without a proper study. As widespread practice became the adoption of budget laws in a package with other legislative acts that significantly change the tax environment or the bases of activity of managers of budgetary money. Approve of the strategic documents in budget policy – the forecast of the State budget for the next two budget periods and the General Directions of Budget Policy – being ignored. We can observe a low quality of budget planning: incomes to the budget depend not from capacities of economy, but from the budgetary needs (as the result, were implemented plans for SFS for taxes collection, shadowing of economy); a high proportion of social spending in the budget structure does not provide a proper social protection. As Antonina Deshko thoughts, the result of the inconsistency budget, debt and economy policy is current situation with public debt and publicly guaranteed debt – it reaches almost 80% of GDP.

“The active phase of the budget process 2017 must begin right now. What will be this budget – approved as in the past years or with quality calculation of all steps for implementing priority reform – it is a rhetorical question”, - Antonina Deshko noted. “In order to achieve a positive result this year and lay the foundation for quality budgeting in Ukraine we offer key initiatives in reforming the fiscal policies. They are: implementation of strategic planning; two-stage procedure for the adoption of the budget; reforming government bodies that are responsible for budget formation; strengthening community participation in the budget process, reform of the Regional Development Fund; compliance procedures for adoption of the budget and so on”.

According to the Deputy Director for Development of the Institute for Economic & Social Studies, the main estimate of the country, first of all, must become a tool of reforms implementation through the efficient project mechanism of financing the development expenditures.

“Due to the last year inefficient state investment policy, only 7% of budget expenditures were directed to the capital expenditures, and rest – to the current. If the current approaches to the financing reforms implementation will not be changed, then we, as in the previous years, will spend significant efforts on amendments to the laws or on the adoption of new ones, but they will not be carried out due to lack of funds. The budget must to stimulate development so every single budget hryvnia could bring 3-5 hryvnias as investments to the state”, - during the briefing noted Svitlana Kovalivska.

Her colleague, expert on social policy of the ISES Marianna Onufryk, pointed that the goal of the budget policy in social sphere must ensure the decent life of Ukrainians; create conditions for their welfare and improving the quality of life.

In our study “The Budget Policy: pragmatic approaches to strategic decisions” we defined 5 principles, on which social policy must be based on. There are the principles of fairness, target approach, subsidiarity, efficiency of the funds usage and stability. The three first ones related directly to the human and the other two – to the system of financing in the sphere of social protection”, - Marianna Onufryk stated.

In his speech during the briefing scientific consultant of the Institute for Social & Economic Studies Yaroslav Zhalilo touched the theme of integration the power’s efforts in formation and implementation the budget policy. In part, he noted that in Ukraine, unfortunately, the budget strategy doesn’t laid even on the legislative level that leads to the conflict of goals of all budget process participants, when everyone has their own goal and own process, which is not working on the common result.

"The main components of the budget policy now are procyclical contradict the goals of growth that reproduces economics depression. Therefore, to neutralize this conflict and avoid destructive conflicts of goals, it is necessary to transfer from the budget fetishism to the economic pragmatism that must permeate the budget policy as on the development expenditures, so on the consumption expenditures and it must be reflected in the General Directions of Budget Policy”, - Yaroslav Zhalilo said.

Summing up the briefing of experts of the Institute for Social & Economic Studies, the Board Member of our analytical center Anatolii Maksiuta noted that the modern budgeting is more likely the response on the current problems rather than laying fundament for development.

“To provide financial growth in budget process, including defining the General Directions of Budget Policy, clear indicators must be taken into account: macro-analysis and macro-prognosis; goals for development; priorities in the reforms implementation financing; indicators of its success. In such structure this document will be clear, understandable and will allow avoiding corruption risks, and society must know about this! We are ready to be involved in the process of its preparation as experts”, - Anatolii Maksiuta summarized.
Read the Study