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12 June 1998
For immediate release
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PRESIDENT KUCHMA EXPRESSES CONCERN OVER SITUATION IN PARLIAMENT
Ukraine's President Leonid Kuchma has expressed serious concern over the current situation in the Verkhovna Rada, which has been unable to elect its speaker since it convened on May 12. Addressing journalists in Astana, Kazakhstan's capital, on May 11, the Ukrainian leader stressed that several important economic bills could not have been adopted as a result of parliament’s impasse. President Kuchma dismissed rumors that he planned to take measures to accelerate election of a parliamentary speaker. According to him, the deputies are well aware that they can no longer afford to waste time on the issue. The President believes that the election of the parliament’s speaker is "a matter of national security".
PARLIAMENT WILL NOT CONSIDER VOTE OF NO CONFIDENCE IN GOVERNMENT UNTIL AUTUMN
Parliament decided on June 10 not to consider a vote of no confidence in the government until July 17, when the current parliamentary session ends. The next session will convene in September. In early June, 191 deputies signed a proposal to include into the agenda a government’s report on implementation of the state budget, including a report on clearance of debts on social payments. The proposal also included consideration of the government's resignation and the adoption of a resolution of no confidence in the Cabinet of Ministers.
Deputies withdrew the proposal on June 9. According to parliamentary procedure, the issue of resignation of the prime minister and individual members of the Cabinet of Ministers or the entire Cabinet may be included into the parliament's agenda if at least one-third of deputies vote in favor. There are a total of 439 registered deputies in the Verkhovna Rada. Almost the entire Cabinet of Ministers, including Prime Minister Valeriy Pustovoitenko, attended the June 10 parliamentary session. The government was not given the opportunity to provide a report, as Parliament decided not to hear a government report until the end of the current session. Pustovoitenko said he considered the possibility of his resignation to be "normal".
PRESIDENT'S ECONOMIC ADVISER: ECONOMY SHOULD STABILIZE IN 1998
Anatoliy Halchynsky, President Kuchma's economic adviser, told a press conference on June 11, that he expected the Ukrainian economy to stabilize and economic growth to begin this year. In his words, in January-May of 1998, for the first time since 1989, Ukraine's GDP has grown by 0.1% which is "a significant increase." According to Mr. Halchynsky, a period of "fragile economic stability" is currently underway in Ukraine. He noted that the Ukrainian national currency remains stable within the established exchange rate corridor while the inflation rate in May was 0%. Mr. Halchynsky stressed that the inflation rate in January - May, totaled 3% compared to 5% for the same period in 1997.
GOVERNMENT DRAFTS NEW AMENDMENTS TO LAW ON 1998 STATE BUDGET
The government has drafted a new version of amendments to the law on the 1998 state budget, according to information from the Ukrainian Cabinet of Ministers. The new amendments will be submitted for parliamentary consideration after their approval at the Cabinet of Ministers meeting scheduled for Thursday. According to the proposed a mendments, the 1998 state budget revenues should total 18,900 million hryvnia (instead of the 21,101 million hryvnia stipulated in the existing law on the 1998 state budget), expenditures should total 21,240 million hryvnia (24,481 million hryvnia), and the state budget deficit should amount to 2,340 million hryvnia (3,380 million hryvnia). External loan funds totaling 1,841 million hryvnia (2,250 million hryvnia) and domestic loans totaling 498 million hryvnia (1,130 million hryvnia) are to be used to cover the state budget deficit. The Finance Ministry calculates the budget deficit as the sum of the government's domestic and external loans minus payments on the basic sums of the debts. According to calculations by Ukrainian News, interests on government internal loan bonds have totaled about 1.6 billion hryvnia this year. Thus, according to the proposed amendments to the 1998 state budget, the negative balance of floatation and payments on government internal loan bonds and other domestic loans will reach about 1.1 billion hryvnia this year. According to the new proposals, the government expects to receive 4,500 million hryvnia from taxing enterprises' profits instead of the 2,172 million hryvnia stipulated in the existing law. Additional revenues totaling 119 million hryvnia are expected to be generated by improving collection of duties and several other revenues. Budget revenues are expected to reduce by 3,760 million hryvnia. The introductory note to the amendments to the law on the 1998 state budget states that the budget revenue target of 21,101 million hryvnia stipulated in the existing budget cannot be reached because of poor tax collection and may be reached only if parliament adopts government-proposed amendments to several tax laws.
GOVERNMENT PLANS TO CLEAR HALF OF BACKLOG SOCIAL PAYMENTS IN 1998
The government plans to clear half of its 2.8 billion hryvnia debt on social payments this year, Deputy Finance Minister Volodymyr Matveychuk told the parliament on June 9. According to Matveychuk, the consolidated budget's debt on social payments remained at 2.8 billion hryvnia (including wage debts totaling 837 million hryvnia) as of early June, same as it was at the beginning of 1998; the state budget's debt on social payments was 1,921 million hryvnia (including wage debts totaling 355 million hryvnia) as of early June. The current Law on the 1998 State Budget allocates 1.3 billion hryvnia (including 909 million hryvnia from the state budget and 391 million hryvnia from local budgets) for clearing debts on wages and social benefits. The government-drafted amendments to the budget provide for increasing this sum by 300 million hryvnia up to 1.6 billion hryvnia. According to Matveychuk, the government is drafting a proposal on generating an additional 100 million hryvnia of non-budgetary funds to clear debts on social payments.
STATE BUDGET REVENUES TOTALED 848 MILLION HRYVNIA IN MAY
According to the State Treasury, Ukraine's state budget revenues totaled 848 million hryvnia in May, including 823 million hryvnia from taxes and 24.8 million hryvnia from privatization. Funds received from the government internal loan bond market and foreign loans for financing the state budget deficit totaled 851 million hryvnia. State budget expenditures totaled 1,720 million hryvnia (including the 66 million hryvnia that remained in the Finance Ministry's deposit accounts at the beginning of the month). According to the Finance Ministry, 19 million hryvnia and 57 million hryvnia were backlogged on May wages and pensions, respectively. The state budget's wage arrears to state sector employees in May increased from 831 million hryvnia to 850 million hryvnia while the state budget debt on pensions increased from 1,524 million hryvnia to 1,581 million hryvnia.