Presidential decree attempts to counter payments crisis (05/26/96)

Presidential decree attempts to counter payments crisis

by Marta Kolomayets
Kyiv Press Bureau

KYIV - In order to help resolve the payments crisis that has forced state employees such as doctors, teachers and military personal to go without wages for months, President Leonid Kuchma issued a decree on May 14 - cracking down on frivolous spending in the government sector and threatening to dismiss ministers and state enterprise directors who fail to pay salaries on time.

According to Prime Minister Yevhen Marchuk, the state owes more than 177 trillion karbovantsi ($700 million U.S.) to pensioners and workers in the state sector.

The 12-point decree, which went into effect immediately, was hailed by reformers in Parliament. It not only puts a moratorium on major office repairs, forbids the purchase of new vehicles, office furniture and equipment, bans foreign business trips and holiday-related expenses until after the debts are paid, but also holds officials criminally responsible if they do not pay out overdue wages.

The decree gives central and local government officials a two-week period during which the executive power bodies have to take steps to repay wages and social assistance.

President Kuchma has instructed the Cabinet of Ministers to prepare by June 1 a draft proposal that holds officials both administratively and criminally responsible for wage arrears. And by July 1, the Cabinet is to prepare a draft proposal that will guarantee the timely issuance of salaries, pensions, social benefits and scholarships.

An ad-hoc committee comprising all of Ukraine's deputy prime ministers and headed by Prime Minister Marchuk has been set up to check on the measures being taken to pay out back wages and pensions. They - along with representatives of the Finance Ministry and tax control authorities and auditors - are to travel to the regions to investigate the causes for wage arrears and report to the Cabinet on May 30.

Prime Minister Marchuk told Interfax-Ukraine that the problems of payment can be found "in the provinces," explaining that he will check out that funds are "correctly" channeled from local budgets to the national one and that the issue of overdue payments can be resolved. He said the main causes behind the overdue wages is the decline in production, the rise in volume of unsold products and violations of budgetary discipline.

Despite these measures, however, it remained unclear where the Ukrainian government was going to get the money to pay back overdue wages, pensions and grants. Addressing the Parliament on May 21, Prime Minister Marchuk said the government plans to use foreign currency reserves for three payments of overdue wages, pensions and grants.

During a meeting of the presidium of the Cabinet of Ministers on May 13, President Kuchma called the practice on non-payment of wages "inadmissible." The presidium recommended that President Kuchma dismiss Yevhen Dovzhok, chairman of the State Committee for Oil, Gas and Oil Refining, for failure to comply with the revenues of the national budget. It also recommended that the president reprimand Viktor Malev, the minister of machine-building and the military-industrial complex, Valeriy Mazur, the minister of industry, Pavlo Haydutsky, the minister of agriculture and food consumption; Ivan Dankevych, transport minister; and Serhiy Polyakov, coal industry minister; for failing to meet revenue targets and exceeding spending limits in the 1996 budget.

"I have warned all the ministers: if this continues to go as it has to this day, these ministers and this Cabinet will not be needed by the nation," said President Kuchma.

On May 23, the Parliament was reviewing the possibility of using International Monetary Fund credits to help pay back wages. After listening to Prime Minister Marchuk's report in Parliament on May 21, some deputies expressed dissatisfaction with the government's efforts to settle the payments crisis, and suggested that the parliament should put the performance of Deputy Prime Ministers Viktor Pynzenyk and Roman Shpek, and Finance Minister Petro Hermanchuk to a vote of no confidence.

The Parliament has also proposed that $200 million from the state foreign currency reserves be used to repay the delayed wages to civil servants.

During a briefing at the presidential administration on May 15, Minister of the Economy Vasyl Hureyev blamed the wage delays on declining production and lack of budget discipline at state enterprises and tax evasion.

Presidential Chief of Staff Dmytro Tabachnyk told reporters that the presidential decree is politically "tough and of paramount significance."

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