Amid uproar, Verkhovna Rada passes controversial budget (12/07/03)

Amid uproar, Verkhovna Rada passes controversial budget

by Roman Woronowycz
Kyiv Press Bureau

KYIV - After tussling in the morning to gain control of the chairman's dais and the day's events as well it seemed, Ukraine's lawmakers passed a controversial 2004 budget on November 27 that temporarily reduced the minimum wage.

The budget bill was approved - with 234 votes in support - after only the second reading of the draft law, marking the first time a budget was passed in such short shrift. In past years a third and final reading was required before the needed changes had been incorporated and lawmakers reached a majority consensus.

Speaking in Kirovohrad on December 2, the same day that President Leonid Kuchma signed the bill into law, Verkhovna Rada Chairman Volodymyr Lytvyn admitted that some short cuts had taken place in the budget procedure, which was not the best way to have approved Ukraine's basic financial document.

"We passed the budget a bit unexpectedly. This year the budget procedure was not fully open and transparent," admitted Mr. Lytvyn, according to Interfax-Ukraine.

He explained that the endorsement of the 2004 budget came quickly due to a series of agreements made between the government and pro-presidential factions. Mr. Lytvyn did not present specifics.

The 2004 budget was passed without the support of the opposition factions and after a last-minute protest by the pro-presidential Agrarian faction, which claimed that the government had not followed through on an agreement to extend tax abatements to the agricultural sector in exchange for its support of the budget bill.

Verkhovna Rada Chairman Lytvyn abruptly aborted the day's stormy proceedings by adjourning the afternoon session prematurely, after the budget's passage led to renewed chaos on the parliamentary floor over what the Agrarians believed they had been promised.

Afterwards, the head of the Parliament's Budget Committee, Petro Poroshenko, a member of the opposition Our Ukraine faction, said the lawmakers had essentially approved a government budget without legislative input because few of the Parliament's recommendations had been incorporated.

Mr. Poroshenko indicated that he would try to have the budget revisited in response to the way in which the government of Prime Minister Viktor Yanukovych seemed to have railroaded the Agrarian faction and its leader, Kateryna Vaschuk.

The problem was rectified the next day, however - with the Agrarian faction presumably assuaged - when lawmakers voted to support a zero tax rate on value-added taxes for agricultural producers through 2005.

Thousands of demonstrators from both sides of the political dialectic stood outside the Parliament Building in the morning - some having arrived before the sun rose - chanting either support for the budget put forth by Prime Minister Yanukovych or opposition to it. Meanwhile, inside the building, lawmakers physically pushed and shoved one another to gain control of the leadership dais, as Mr. Lytvyn and his two vice-chairman were readying to enter the session hall from their side offices.

The opposition factions, led by the Our Ukraine political bloc, have on several recent occasions blocked the work of the Parliament by storming to the front of the session hall at the beginning of the work day and preventing the proceedings from going forward. This time, however, Chairman Lytvyn broke the paralysis by catching the lawmakers off guard with a list of the national deputies who were celebrating birthdays that day, among them Yulia Tymoshenko, a central figure in the opposition camp. The move effectively lifted the heavy atmosphere in the hall and allowed for normal work - for a time.

The issue that recharged the air in the session hall was the matter of the minimum wage. The government budget had recommended that the minimum wage temporarily fall to 205 hrv after the New Year, after lawmakers had previously voted to raise it to 237 hrv as of December 1. In the week prior to the passage of the budget, government officials, including First Vice Prime Minister Mykola Azarov, had explained that "considering the reality of the situation" and "the real possibilities within the budget" the government could not allow for such a rise in government minimum pay and pension, while reducing its source of revenues by reducing the income tax to 13 percent, as the new budget foresaw.

While the government underscored that the scheduled wage rise to 237 hrv would still take place, but not until November of next year, opposition forces noted that the reduced wage, if enacted, would be the first reduction in the minimum wage since Ukraine gained its independence.

When some lawmakers questioned the legality of reducing the minimum wage within the budget as a whole, the Verkhovna Rada pro-presidential majority tried to pre-empt possible problems by quickly passing a separate bill on November 25 that adjusted the wage hike scheduled for December 1 from to 237 hrv to 205 hrv. President Kuchma signed that bill into law the next day.

It was a simple human error that caused the political temperature in the session hall to finally shoot through the roof on budget day and resulted in at least one red face when it was noted during final debate on the budget that Mr. Lytvyn had improperly identified the November 25 bill that lowered minimum pay.

As recorded in the official transcript from the session, Mr. Lytvyn had incorrectly identified the serial number of the bill that lawmakers had passed as the bill introduced by opposition leader Oleksander Moroz of the Socialist faction, which recommended that the minimum wage be raised to 305 hrv, not lowered to 205 hrv.

While it was evident that the verbal misquote was a simple, correctable error, the confusion that followed only made a difficult day for the national deputies that much more stressful.

In the end, the lawmakers approved a budget that raised the level of spending for 2004 by 14.9 percent and expected revenues by 14 percent over the 2003 budget. It envisaged a deficit of 5.3 percent of spending. Total revenues in 2004 were expected to be 60.7 billion hrv ($11.4 billion), and budget outlays were predicted to reach 64.2 billion hrv ($12.04 billion).

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